1. Director of Lands et.al vs Funtillar et.

Al (GR 68533 May 23, 1986)

FACTS: This is a petition to review the decision of the respondent court which affirmed the
adjudication by the land registration court of a parcel of land in favour of the private
respondents. The land was part of the property originally belonging to one Candida Fernandez
whose ownership and possession began sometime during her lifetime and extended until 1936
when she died. Sometime in1940 or 1941, the parcel of land was forfeited in favour of the
government for failure to pay real estate taxes. However, the same was redeemed in 1942 by
Vitaliano Aguirre, one of the three children of Candida Fernandez, who was then the
administrator of the property. A final deed of sale was executed by the Provincial Treasurer in
favor of Vitaliano Aguirre. The heirs of Candida Fernandez later partitioned the property among
themselves. The particular lot now was adjudicated in favor of the applicants-respondents. In
1972, private respondents, who were the grandchildren of Fernandez, applied for the
registration of a parcel of land. The Director of Lands and Director of Forest Development filed
an opposition alleging that neither applicants nor their predecessor-in-interest possessed
sufficient title to the land; that neither applicants, nor their predecessors have been in open,
continuous, exclusive and notorious possession and occupation of the land for at least thirty
(30) years immediately preceding the filing of the application; and that the land is a portion of
the public domain belonging to the Republic of the Philippines.
ISSUE: Whether or not private respondents have established possession for at least thirty years
to entitle them to confirmation of imperfect title and registration under the law
HELD: Yes. Long before Candidas death in 1936, she already possessed the disputed
property. This possession must be tacked to the possession of her heirs, through administrator
Vitaliano Aguirre, and later to the possession of the private respondents themselves, who are
Candida's grandchildren. The fact of possession is bolstered by the forfeiture in1940 of the land
in favor of the government. It would be rather absurd under the circumstances of this case to
rule that the government would order the forfeiture of property for non-payment of real estate
taxes if the property is forest land. It is also reasonable to rule that the heirs of Candida
Fernandez redeemed the property because they wanted to keep the land of the deceased in the
possession of their family, thus continuing prior possession. From 1936 and earlier up to 1972 is
more than the required period.

2. Arradaza et.al vs CA & Larrazabal (GR 50422 Feb. 8, 1989)

FACTS: The petitioners were the legitimate children of spouses Ignacio Arradaza and Marcelina
Quirino who died on August 31, 1974. In 1941, Ignacio Arradaza and Marcelina Quirino
purchased from spouses Gervacio Villas and Jovita Tabudlong a piece of land. The deed of sale
was lost during the war and Original Certificate of Title No.35901 was therefore issued in the
name of Gervacio Villas and Jovita Tabudlong but they recognized the vendee spouses as the
real owners of the land. On October 21, 1947, Ignacio Arradaza sold the same land to Estelita
Magalona Bangloy. She took over possession of the land, declared it for taxation purpose and
paid taxes thereon. On February 13, 1963 while the land was still in the name of spouses Villas,
Larrazabal purchased the property from Estelita Magalona Bangloywhich was evidenced by a
"Deed of Sale of a Parcel of Land" executed in favor of Larrazabal. Original Certificate of Title
No. 35901 was cancelled and Transfer Certificate of Title No. 4581 was issued in the name of
private respondent and the land was declared for taxation purposes. On January 18, 1975,
petitioners filed an action against private respondent before the CFI of Leyte to recover their
one-half (1/2) share of the land as heirs of Ignacio Arradaza and Marcelina Quirino, and to

exercise the right of legal redemption over one-half (1/2) of the property sold by their deceased
father while he was already a widower on October 21, 1947.Private respondent on the other
hand, maintains that prescription has set in because the predecessors-in-interest of petitioners
were not registered owners protected by Act 496, He asserts that when the transaction occurred
on October 21, 1947 the Code of Civil Procedure was still in force. The prescriptive period was
only ten (10) years irrespective of the good or bad faith of Estelita M. Bangloy. The trial court
rendered a Summary Judgment in favor of the private respondent which was affirmed by the
Court of Appeals. Hence, this petition.
ISSUE: Whether or not the Court of Appeals erred in the decision
RULING: No, decision of court of appeals is affirmed. Summary judgment procedure is a
method for promptly disposing of action in which there is no genuine issue as to the existence of
any material fact. The Record on Appeal clearly shows that petitioners and respondents
submitted their respective lists of witnesses and their affidavits, and exhibits during the pre-trial,
and memoranda. Private respondent, in particular, submitted among others, exhibits, Transfer
Certificate of Title No. 4581 in his name and that of his wife dated April 18, 1963, and tax
declarations in his name and that of his predecessors-in-interests. From these affidavits,
exhibits and other evidence, the trial court rendered its Summary Judgment. An examination of
the record clearly and readily shows that the statute of limitation has stepped in and that the
petitioners are guilty of laches and that the property has been in possession of private
respondent who is a purchaser in good faith and for value. There is therefore, no genuine triable
issue of fact.

3. David vs Bandin (GR 48322 April 8, 1987)

FACTS: During their lifetime, the spouses Juan Ramos and Fortunate Calibo, were the owners
of two parcels of land; the Talon Property and Laong property. Both spouses died intestate,
leaving as heirs two legitimate children, Candida and Victoriana Ramos, and grand-daughter,
Agapita Ramos, daughter of their deceased Sora Anastacio. Candida and Victoriana died
intestate on February 16, 1955 and December 12,1931, respectively. Candida Ramos; her
niece, Agapita Ramos; and her nephew, Eulogio Bandin, sold a portion of the Talon property to
the spouses Rufino 0. Miranda and Natividad Guinto. This portion was divided into three lots.
Parcel 1 was subsequently sold to Narciso Velasquez and Albino Miranda. Parcels 2 and 3
were subsequently sold to Jose Ramirez and Sotero Ramirez, repectively, who registered these
properties and obtained OCT Nos. 2027 and 2029 in their respective names. The remaining
portion of the Talon property was extra judicially partitioned on September17, 1955 among the
heirs of Candida Ramos and was subdivided in seven lots. Lot 5 was given to Victoria Martin,
who was able to register the land and was issued OCT No. 3706. Lot 6 was given to Maximina
Martin, who also was able to register the land and was issued OCT No. 3707. A portion of these
lots were subsequently sold to Magno de la Cruz who was able to obtain TCT. The Laong
property was sold by Candida Ramos and her children on December 19, 1943 to Hermogenes
Lucena, husband of Juanita Martin, one of the daughters of Candida. On September 23, 1959,
Juanita (then widowed) sold the property to the spouses Gregorio and Mary Venturanza. On
January21, 1965, the Venturanzas, in a deed of sale also signed by Juanita Martin, conveyed a
portion of the property to the spouses Felipe and Antonia David. Juanita Martin was able to
register the property in her name and was issued OCT No. 8916 on July 1, 1971.On June 14,
1963, respondents, who were the heirs of Victoriana except for Agapita, filed a complaint for the
recovery and partition of property. A decision was rendered by the trial court, in favor of the

plaintiffs,declaring, however, that certain properties could no longer be reconveyed to plaintiffs

since they had been transferred to purchasers who bought them in good faith for value. Not
satisfied with the decision, both plaintiffs and defendants appealed to the Court of Appeals
which nullified the transfers made to the defendants who were declared by the trial court as
purchasers in good faith.
ISSUES: Whether or not private respondents' claim is barred by prescription2. Whether or not
petitioners were buyers in good faith
HELD: No. Respondents claim is not barred by laches and prescription since it was not shown
that they were guilty of negligence or slept on their rights. They sent a letter of demand to the
heirs of Candida Ramos on April 23, 1963, and filed their complaint against them on June 14,
1963, or within a period of approximately eight (8) years from Candida's death.
Petitioners Felipe David and Antonia G. David were buyers in bad faith. They bought the
property when it was still unregistered land. The defense of having purchased the property in
good faith may be availed of only where registered land is involved and the buyer had relied in
good faith on the clear title of the registered owner. One who purchases an unregistered land
does so at his peril His claim of having bought the land in good faith, i.e. without notice that
some other person has a right to, or interest in, the property, would not protect him if it turns out
that the seller does not actually own the property.

4. Gallardo vs Intermediate Appellate Court (GR 67742 October 29, 1987)

FACTS: Petitioners were nephew and niece of the late Pedro Villanueva and first cousin of the
private respondent Marta Villanueva vda. de Agana, the latter being the daughter of Pedro
Villanueva. The subject matter of this controversy involves a parcel of land situated in Cavinti,
Laguna consisting of 81,300 square meters, more or less, initially covered by an original
Certificate of Title No. 2262, issued on April 2, 1924 owned and registered in the name of the
late Pedro Villanueva. On August 10, 1937, petitioner claimed that the aforestated land was sold
to them in a private document, an unnotarized deed of sale written in Tagalog that was allegedly
signed by the late Pedro Villanueva conveying and transferring the property in question in favor
of the petitioners. Subsequently, the Original Certificate of Title was cancelled and a new
certificate of title was issued in the name of the petitioners covered by Transfer Certificate of
Title No. RT- 6293 (No. 23350) on January 4, 1944. On November 17, 1976, defendant Marta
Villanueva together with Pedro Villanueva, Jr., and Restituto R.Villanueva executed and filed an
Affidavit of Adverse Claim with the Office of the Register of Deeds of Laguna. When petitioners
learned of this Affidavit of Adverse Claim, attempt was made to settle said controversy
amicably, but they failed. So, petitioners instituted court suit against the private respondent and
her husband, Dr. Marcelo S. Agana, Sr. by filing a complaint for Quieting of Title and Damages
with the Court of First Instance of Laguna on February 3, 1977. The Court of First Instance of
Laguna rendered its decision declaring the deed of sale of August 10, 1937, as well as the
reconstituted transfer certificate of title of petitioners, void ab initio.
Thus, petitioners filed notice of appeal to the Intermediate Appellate Court. However, the
Intermediate Appellate Court, on May 22, 1984, affirmed in toto the decision of the trial court.
Hence, this petition.
ISSUE: Whether or not there was a valid reconstitution of Transfer Certificate of TitleNo. RT6293 (No. 23350) issued in the names of petitioners.

HELD: No. Section 127 of Act 496 which requires, among other things, that the conveyance be
executed "before the judge of a court of record or clerk of a court of record or a notary public or
a justice of the peace, who shall certify such acknowledgment substantially in form next
hereinafter stated was violated.
The action of the Register of Deeds of Laguna in allowing the registration of the private deed of
sale was unauthorized and did not lend a bit of validity to the defective private document of sale.
With reference to the special law, Section 127 of the Land Registration Act, Act 496 Deeds of
Conveyance, affecting lands, whether registered under this act or unregistered shall be
sufficient in law when made substantially in accordance with the following forms, and shall be as
effective to convey, encumber or bind the lands as though made in accordance with more prolix
forms heretofore in use. It is therefore evident that Exhibit "E" in the case at bar is definitely not
registerable under the Land Registration Act. Also, the contention that ownership over
registered property may be acquired by prescription or adverse possession is absolutely without
merit. No title to registered land in derogation of that of the registered owner shall be acquired
by prescription or adverse possession. Prescription is unavailing not only against the registered
owner but also against his hereditary successors.

5. Narciso Buenaventura and Maria Buenaventura vs CA and Manotok Realty , Inc.

(GR 50837 Dec. 28, 1992)
FACTS:
Petitioners' allegation in their complaint filed in the court of origin, that fraud was employed in
the execution of a deed of sale and subsequently, in the issuance of a transfer certificate of title,
renders their action for reconveyance susceptible to prescription either within 4 years or 10
years. In the present case, even if one bends backwards and considers the circumstances
alleged as having created an implied or constructive trust, such that the action for reconveyance
would prescribed in the longer period of 10 years, still petitioners' action is plainly time-barred.
Considering that the deed of sale executed by the Philippine Homesite and Housing Corporation
in favor of Lorenzo Caia and Francisca Caia-Rivera was executed on November 4, 1965 and
on the following day, Transfer Certificate of Title No. 21484 was issued in favor of the vendees
(private respondents), the party allegedly defrauded in the transaction, herein petitioners, had
only 10 years or until September 5, 1975 within which to file the appropriate action. In the
instant case, the action was filed only on December 28, 1976, which was beyond the prescribed
period set by law. Aggrieved by the rules of the trial court, herein private respondents filed a
petitioner with the Court of Appeals which later granted the petitioner and ordered the dismissal
of the complaint of then private respondents, now herein petitioners, on the ground that their
action has already prescribed. A subsequent motion for reconsideration was to no avail.
ISSUE: Whether or not petitioner Court of Appeals erred in the decision
RULING: No, The defendant-appellee purchased the parcel of land in question giving rise to the
complaint of herein plaintiffs-appellants. The latter delayed the assertion of their supposed right
to annul the sale for a period of over fifteen (15) years despite knowledge or notice of such sale.
They had all the opportunity within that period of time to take action to set aside or annul the
sale. Defendant-appellee was never apprised of any intention on the part of plaintiffs-appellants
to annul the sale until this action was filed. Finally, the defendant-appellee stands to lose the
property in question if the suit filed against him by plaintiffs-appellants shall be deemed barred.

6. Francisco v. CA, 122 SCRA 538 [1983]

FACTS: On February 6, 1966, Dr. Patrocinio Angeles, who was then the Director of the Morong
Emergency Hospital, filed a case for intriguing against honor allegedly committed on December
26, 1965 by Dr. Emiliano and Atty. Harry Bernardino. On May 3, 1966, the Provincial Fiscal filed
an information against Francisco and Bernardino with the CFI of Rizal of the crime of grave oral
defamation. Later, upon order of the court, the information was amended by adding statements
allegedly uttered by the two accused constituting the crime of slander.
On Feb. 1, 1973, the trial court convicted Francisco and Bernardino of the crime of grave
oral defamation and sentenced each of them the penalty of arresto mayor and was made to pay
the complainant P10,000. Upon appeal in the Court of Appeals, the trial court's decision was
modified finding the accused guilty of simple slander. Bernardino passed away while this
petition was instituted in the Supreme Court. Francisco, then argues that since the CA had
found that the offense committed was the lesser offense of simple slander, which under Art. 90
of the RPC, prescribes in two months, the CA should have dismissed the case. Further,
Francisco claims that the CA should have acquitted him on the ground that the said crime had
already prescribed as per evidence presented, the alleged defamatory remarks were committed
on December 26, 1965, while the information charged against him was filed more than four
months later.
The Solicitor General, however, contends that "for the purpose of determining the proper
prescriptive period, what should be considered is the nature of the offense charged in the
information which is grave oral defamation, not the crime committed by the accused, as said
crime was found by the Court to constitute only simple slander". Since the prescription for grave
oral defamation is six months, the crime has not yet prescribed when it the information was filed.
Moreover, the Solicitor General argues that the filing of the complaint in the Fiscal's office
interrupts the period of prescription. Only 39 days had passed from the time the offense was
allegedly committed to the day of the filing of the complaint.
ISSUES: Whether or not the crime of simple slander found by the CA to be the offense
committed by the petitioners has prescribed.
Whether or not the filing of a complaint in the Fiscal's office interrupts the prescription of an
offense.
HELD:
1. Yes. An accused cannot be convicted for the lesser offense necessarily included in the crime
charged if at the time of the filing of the information, the lesser offense has already prescribed.
To hold otherwise, according to the Court, would be to sanction a circumvention of the law on
prescription by the simple expedient of accusing the defendant of the graver offense.
2. Yes. Prescription is interrupted with the filing of the case even if the court is without
jurisdiction, even if it be merely for purposes of preliminary examination or investigation. Thus,
the filing of the complaint in the Fiscal's office interrupts the period of prescription.
7. Quirino Mateo & Matias vs Dorotea diaz et. al (GR 137305 Jan. 17, 2002)
FACTS: The land involved is registered under the Torrens system in the name of petitioners
father Claro Mateo. There is no question raised with respect to the validity of the title.
Immediately after petitioners discovered the existence of OCT 206 in 1977 or 1978, they took

steps to assert their rights thereto. They divided the land between the two of them in an
extrajudicial partition. Then petitioners led the case below to recover ownership and
possession as the only surviving children of original owners, the late Claro Mateo. The Regional
Trial Court (RTC), Bulacan, at Malolos, ruled that prescription and laches are applicable against
petitioners, that real actions over an immovable prescribe after 30 years, that ownership can be
acquired thru possession in good faith and with just title for a period of 10 years, and that
ownership may be acquired thru uninterrupted adverse possession for 30 years without need of
just title or of good faith. The Court of Appeals (CA) affirmed that of the trial court, thus, this
petition for review on certiorari.

ISSUE: Whether or not the equitable doctrine of laches may override a provision of the Land
Registration Act on imprescriptibility of title to registered land. Otherwise put, the issue raised is
whether prescription and the equitable principle of laches are applicable in derogation of the title
of the registered owner.

HELD: A party who had led immediately a case as soon as he discovered that the land in
question was covered by a transfer certicate in the name of another person is not guilty of
laches.(St. Peter Memorial Park, Inc. v. Cleofas, 92 SCRA 389 [1979]).An action to recover
possession of a registered land never prescribe in view of the provision of Sec. 44 of Act 496
(now Sec. 47 of PD 1529) to the effect that no title to registered land in derogation to that of a
registered owner shall be acquired by prescription or adverse possession.
The Supreme Court thereupon reverses the CAs decision. In lieu thereof, the Court remands
the case to the trial court for determination of the heirs of Claro Mateo in a proper proceeding.
8. Far East Bank & Trust Co. vs Estrella Q. Querimit (GR 148582 Jan. 16, 2002)
FACTS: Respondent deposited her savings with petitioner-bank. She did not withdraw her
deposit even after maturity date of the certicates of deposit (CDs) precisely because she
wanted to set it aside for her retirement, relying on the banks assurance, as reected on the
face of the instruments themselves, that interest would accrue or accumulate annually even
after their maturity. Petitioner-bank failed to prove that it had already paid respondent, bearer
and lawful holder of subject CDs, petitioner failed to prove that the CDs had been paid out of its
funds, since evidence by respondent stands unrebutted that subject CDs until now remain
unindorsed, undelivered, and unwithdrawn by her.
ISSUE: Whether or not it is unjust to allow the doctrine of laches to defeat the right of
respondent to recover her savings which she deposited with the petitioner?
RULING: Yes, it would be unjust not to allow respondent to recover her savings which she
deposited with petitioner-bank. For one, Petitioner failed to exercise that degree of diligence
required by the nature of its business. Because the business of banks is impressed with public
interest, the degree of diligence required of banks is more than that of a good father of the
family or of an ordinary business rm. The duciary nature of their relationship with their
depositors requires banks to treat accounts of their clients with the highest degree of care.
Respondent is entitled to moral damages because of the mental anguish and humiliation she
suffered as a result of the wrongly refusal of petitioner to pay her even after she had de-livered

the CDs. (Arts. 2217 and 2219). In addition, petitioner should pay respondent exemplary
damages which the trial court imposed by way of example or correction for the public good (Art.
2229). Finally, respondent is entitled to attorneys fees since petitioners act or omission
compelled her to incur expenses to protect her interest making such award just and equitable.

9. Development Bank of the Philippines vs CA and Carlos Cajes (GR 129471 April 28,
2000)
FACTS: Petitioner led an ejectment suit against private respondent, claiming ownership of a
parcel of land covered by a TCT, which included the 19.4 hectares being occupied by the latter.
The trial court declared petitioner to be the owner of the land, but the Court of Appeals (CA)
reversed the trial court. On appeal, petitioner claimed that its predecessor-in-interest had
become the owner of the land by virtue of the decree of registra-tion in his name. The Supreme
Court afrmed the CA.
ISSUE: Whether or not petitioner be the owner of the disputed land
RULING: Taking into consideration the possession of his predecessor-in-interest, private
respondent had been in uninterrupted adverse possession of the land for more than 30 years
prior to the decree of registration issued in favor of petitioners predecessor-in-interest. Such
possession ripened into ownership of the land thru acquisitive prescription a mode of acquiring
ownership and other real rights over immovable property. A decree of registration cut off or
extinguished a right acquired by a person only when such right refers to a lien or encumbrance
on the land which was not annotated on the certicate of title issued thereon, but not to the right
of ownership thereof. Registration of land does not create a title nor vest one. Accordingly, the
19.4 hectares of land being occupied by private respondent must be reconveyed in his favor.

10. Presidential Ad hoc fact-Finding Committee on Behest Loans vs Aniano A.

Desierto (GR 130340 Oct. 25, 1999)
FACTS: Behest loans, which are part of the ill-gotten wealth which former President Ferdinand
E. Marcos and his cronies accumulated and which the Government thru the Presidential
Commission on Good Government (PCGG) seeks to recover, have a prescriptive period to be
counted from the discovery of the crimes charged, and not from the date of their commission. If
the commission of the crime is known, the prescriptive period shall commence to run on the day
it was committed.

ISSUE: Whether or not action may be barred by prescription

RULING: The prosecution of offenses arising from, relating or incident to, or involving ill-gotten
wealth contemplated in Sec. 15, Art. XI of the Philippine Constitution of 1987 may be barred by
prescription. Said provision applies only in civil actions for recovery of ill-gotten wealth, and not
to criminal cases.

11. De Jesus et. al vs CA (GR 57092 Jan. 21, 1993)

FACTS: Reckoned from the time she executed the affidavit of adjudication in 1961, eleven
years after the New Civil Code had taken effect, private respondents possession of the
contested lot is far too short of the prescriptive period of 30 years, considering that her
possession is in bad faith. The ling of the petition for recovery of ownership and possession
and quieting of title by petitioners on Apr. 27, 1973 was well below the acquisitive prescriptive
period for private respondent, which is 30 years under Art.1141 of the present Civil Code. In this
case, the statutory period of prescription is deemed to have commenced when petitioners were
made aware of a claim adverse to them, when the affidavit of adjudication was duly registered
with the Registry of Deeds which, at the earliest may be considered to be in 1974, when private
respondent was able to secure a tax declaration in her name.
ISSUE: Whether or not the court of appeals erred in the decision in declaring the private
respondents to be the absolute owner of the land
RULING: Prescription running even after the effectivity of the New Civil Code on August 30,
1950, continued to be governed by Sec. 41 of the Old Civil Code. Under the present Civil Code,
the prescriptive period required for the acquisition of immovable property is 10 years if the
possession is in good faith, and 30 years if in bad faith. Such open, continuous, exclusive and
notorious occupation of the disputed property for 30 years must be conclusively established.

12. G.R. No. L-28616 January 22, 1980

TOMAS RODIL and the deceased spouse CATALINA CRUZ, substituted by her heirs,
namely: VIVENCIO RODIL married to ZUEKO MATSUO CONSOLACION RODIL married to
FRANCISCO HEMEDES DOMICIANO RODIL married to VIRGINIA MARALIT, CLARITA
RODIL married to JUAN ALGIER NATALIA RODIL married to SILVINIANO ATIENZA,
LYDIA RODIL married to CARLOS HORILLENO VEDASTO RODIL married to TESSIE
MANGUBAT and CELIA RODIL married to MACARIO TIU JR., petitioners,
vs.
HON. JUDGE MARIANO V. BENEDICTO as Judge of the COURT OF FIRST INSTANCE OF
NUEVA ECIJA, BRANCH V-GAPAN and the heirs of ALEJANDRO ABES, namely: ALEJO
ABES, BIENVENIDO ABES, ROSITA ABES, married to MATEO MALLARI, FIDELA ABES,
married to PONCIANO ATENIDO, DAVID ABES, MARCELO ABES, NICANOR ABES,
SEVERINO ABES, JOVITA ABES, married to GIL CABRETA EUFROCINA ABES, married
to ROMULO BOTE; LOURDES ABES, married to ALIPIO TAGNIPIS LUZ ABES, TEODORA
ABES, EMITERIO ABES, JR., GREGORIO ABES, ERLINDA ABES, married to LUIS TAAL,
RENATO ABES, ESTRELLITA TALPLACIDO REYNALDO ABES, TERESITA ABES,
CAROLINA ABES, and FERNANDO ABES; the latter four who are minors are represented
by their mother CRISPINA DOMINGO, respondents.
FACTS:

Cadastre were claimed and applied for by the Spouse Tomas Rodil and Catalina Cruz. The
claim was not contested. Afterwards, the cadastral court adjudicated the lots in favor of the
applicant and the Original Certificate was issued also in favor of them. However, the heirs of
Alejandro Abes filed a petition with the court for the review of the registration decree upon the
ground that they are the true owner and in actual possession of the land and that the spouseclaimant was secured such land thru fraud. The cadastral court denied the petition for review
that the heirs of Alejandro Abes failed to overcome the evidence of the above stated petitioner.
The spouse filed a petition for the issuance of writ of possession asking that they be placed in
possession of the lots and the private respondents be evicted.
The heirs of Alejandro Abes also filed a Motion for Reconsideration contending that the petition
for the writ of possession was filed out of time and that there was no allegation in the petition
and neither was it proved that the respondent were defeated in the registration proceeding. The
respondent judge set aside the decision and ordered the dissolution of the writ of possession.
The petitioner filed a Motion for Reconsideration but was denied.

ISSUE:
Whether or not the filing of the petitioner for the petition of the issuance of writ of possession
was filed out of time.

RULING
No. the decision in the land registration case has become final; it may not be enforced after the
lapse of a period of 10 years, except by another proceeding to enforce the judgment or decision.
This is derived from the provision of the Ruled of Court and refers to civil actions and is not
applicable to special proceedings, such as a land registration case.
In special proceedings the purpose is to establish a status, condition or fact; in land registration
proceedings, the ownership by a person or a parcel of land is sought to be established. After the
ownership has been proved and confirmed by judicial declaration, no further proceeding to
enforce said ownership is necessary, except when the adverse or losing party had been in
possession of the land and the winning party desires to oust him therefrom.

13. G.R. No. 97332 October 10, 1991

SPOUSES
JULIO
D.
VILLAMOR
AND
MARINA
VILLAMOR, petitioners,
vs.
THE HON. COURT OF APPEALS AND SPOUSES MACARIA LABINGISA REYES AND
ROBERTO REYES,respondents.

FACTS
Private respondent was the owner of a 600-square meter lot and she sold a portion of 300
square meter of the said lot to the Spouses Villamor which is the petitioners. Private
Respondent executed a Deed of Option in favor of the Villamor in which the remaining 300
square meter portion would be sold to the petitioners under the conditions stated in the deed. In
the deed, it stated that the private respondent and her husband agreed to sell and convey the
remaining one-half portion whenever the need for that sale arises either on the part of the
private respondents or the petitioners at the same price of 70.00 per square meter. However,
after the husband of private respondent retired, they offered to repurchase the lot sold to the
petitioners but they had refused and reminded about the deed of option. On the other hand, the
petitioners contention that they had express their desire to the private respondent to purchase
the remaining half portion of the lot but they are being ignored by the latter.
The petitioners filed a complaint for specific performance against the private respondent which
was rendered by the trial court in favor of them and ordered the private respondent to sell unto
them the lot. Not satisfied by the decision, the private respondent appealed to the Court of
appeals which reversed the trial courts decision on finding that the Deed of Option is void for
lack of consideration.
ISSUE
Whether or not the Deed of Option is valid
RULING
No. A contract of sale is, under Article 1475 of the Civil Code, "perfected at the moment there is
a meeting of minds upon the thing which is the object of the contract and upon the price. From
that moment, the parties may reciprocally demand perform of contracts." Since there was,
between the parties, a meeting of minds upon the object and the price, there was already a
perfected contract of sale. What was, however, left to be done was for either party to demand
from the other their respective undertakings under the contract. It may be demanded at any time
either by the private respondents, who may compel the petitioners to pay for the property or the
petitioners, who may compel the private respondents to deliver the property.
However, the Deed of Option did not provide for the period within which the parties may
demand the performance of their respective undertakings in the instrument. The parties could
not have contemplated that the delivery of the property and the payment thereof could be made
indefinitely and render uncertain the status of the land. The failure of either parties to demand
performance of the obligation of the other for an unreasonable length of time renders the
contract ineffective.
14. G.R. No. 139776

August 1, 2002

PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE COMPANY, petitioner,

vs.
JUDGE LORE R. VALENCIA-BAGALACSA, Regional Trial Court of Libmanan, Camarines

Sur, Branch 56, and EDUARDO Z. LUMANIOG, CELSO Z. LUMANIOG and RUBEN Z.
LUMANIOG, respondents
FACTS
Faustino Lumaniog was insured by the petitioner under Life Insurance Policy with the face value
of P50, 000.00 and he died of coronary thrombosis. His heirs, the private respondent which is
his legitimate children filed before the RTC a complaint for the recovery of sum of money
against the petitioner alleging that they continuously claimed for all the proceeds and interest
under the life insurance policy and despite the repeated demands for payment and/ for
settlement of the claim due for the petitioner, they finally refused or disallowed said claim after
several years later. However, the petitioner counterclaim that the cause of action of private
respondent had prescribed and they are guilty of laches, which the ground of concealment on
the part of the deceased when he asserted in his application for insurance coverage that he had
not been treated for indication of chest pain and other illness, well in fact he was known
hypertensive. The RTC upholds the Order the claim of private respondents counsel that the
running of the 10-year period was stopped and when petitioner finally decided to deny their
claim that the 10-year period it was only begun to run. Petitioner filed a petition for certiorari in
Court of Appeals but it affirmed the decision of the RTC, stating that the 10-year period should
instead be counted from the date of rejection by the insurer since this is the time when the
cause of action accrues.
ISSUE
1. Whether or not the 10-year period will start after the cause of action accrues.
2. Whether or not the RTC committed grave abuse of discretion in its order that the 10-year
period had not yet lapsed.

RULING
1. Yes. The 10-year period will be counted from the date of rejection by the insurer. The
cause of action did not accrue until the claim was finally rejected by the insurance
company. This is because, before such final rejection, there was no real necessity for
bringing the suit. However, in this case, the denial of the claim had already been made
by the petitioner through a letter and the private respondent did not gave rise the cause
of action.
2. Yes. The RTC arbitrarily ruled in its Order that the 10-year period had not yet lapsed
because it is based on the finding on mere explanation of the private respondents
counsel and not the evidence presented by the parties as to the date when to reckon the
prescriptive period. The ruling of the RTC that the cause of action of private respondent
had not prescribed is arbitrarily and patently erroneous for not being founded by
evidence on record and therefore, the same is void.

15. G.R. No. L-45277 August 5, 1985

AUGUSTO
BASA, petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, represented by the Solicitor General, and Judge
GUILLERMO F. VILLASOR, Branch XV, Court of First Instance of Manila, respondent.
FACTS
The Commissioner of Internal Revenue assessed against the petitioners deficiency income
taxes. The deficiencies were based on the taxpayers failure to report in full his capital gains on
the sales of land. This result to justify the imposition of 50% surcharge, in which the taxpayer did
not contest the assessment in the Tax Court. On the assumption that the assessment had final
and incontestable, the Commissioner sued the taxpayer in Manila Court of First Instance for the
collection of the amount which rendered their decision against the petitioner and ordered him to
pay the surcharge. The petitioner then appealed to the Court of Appeals and did not perfected
his appeal within the reglementary period.
ISSUE
Whether or not petitioners cause of action has prescribed.
RULING
Yes. The issue of prescription raised by him is baseless. The assessments were predicated on
the fact that his income tax returns, if not fraudulent, were false because he under declared his
income. In such a case, the deficiency assessments may be made within ten years after the
discovery of the falsity or omission. The court action should be instituted within five years after
the assessment but this period is suspended during the time that the Commission is prohibited
from instituting a court action.

16. G.R. No. L-46893 November 12, 1985

REPUBLIC
OF
THE
vs.
FRANCISCO RICARTE, defendant-appellee.

FACTS

PHILIPPINES, plaintiff-appellant,

Francisco Ricarte filed his income tax return and the Office of the Collector of Internal Revenue
made corresponding assessment and fixed at P222.00 the defendants income tax liability
pursuant to the express provision of Section 51 (a) of the National Internal Revenue Code, then
in effect. The defendant paid his income tax in two equal installment of P111.00. The R.A. 2343
took effect amending the old law which includes the Section 51(a). Under its amendatory, the
taxpayer assess himself, files his return and pays the tax as shown in his return upon filing
thereof. After investigation, it was found out that the defendant had a deficiency of P1, 136.87 in
his income tax and a notice was issued and together with corresponding audit sheet and letter
of demand, was emailed to the defendant. For the failure of the defendant to pay his deficiency
in income tax liability, the petitioner filed a complaint for collection of taxes before the City Court
of Cebu. After hearing and trial, the city court dismissed the case on the ground of prescription
of action. The case was filed only more than the prescriptive period of five years. The issue was
upheld to the Court of First Instance of Cebu which rendered their decision dismissing the
appellants complaint on the ground that the basis for the assessment are made under the
provisions of a new law, R.A. 2343 which was not yet in effect at the time of the filing of the
defendants income tax return and the action against the defendant had already prescribed.
ISSUE
Whether or not the cause of action had already been prescribed.
RULING
Yes. The lower court that the present action was filed after the prescriptive period of five (5)
years provided for in Section 332(c) of the National Internal Revenue Code which reads:
(c) Where the assessment of any internal revenue tax has been made within the
period of limitation above described such tax may be collected by distrait or levy
or by a proceeding in court, but only if begun (1) within five years after the
assessment of the tax,
Appellant asseverates that the present action was filed within the five-year prescriptive period
provided for under the above quoted provision of the tax code; that the subsequent notice of
assessment was made and appellee notified; that from January 19, 1961 up to the date this
case was filed in court on January 14, 1966, only four years, eleven months and twenty-five
days had elapsed.
Thus, the prescriptive period provided for in Section 332(c) of the tax code should be counted
from April 6, 1959, the date when the Bureau of Internal Revenue assessed the income tax
return of the appellant. From said date until the filing of this case on January 14, 1966, six years
and nine months had elapsed. Verily, the action had already prescribed.
17. G.R. No. L-57493 January 7, 1987
BALIWAG
TRANSIT,
vs.
THE HON. COURT OF APPEALS AND ROMAN MARTINEZ, respondents.

INC., petitioner,

FACTS
Two passenger bus lines with similar buses and similar routes were being operated by firm
names Baliwag Transit and Baliwag Transit, Inc (BTI) in which the petitioner of this case. The
former was owned by Pascual Tuazon who continued to operate it until his death while the latter
was owned by Mrs. Victoria Vda. de Tengco, the niece of Mr. Tuazon which exist until the
present time. Both bus lines operate under different grants of franchise by the Public Service
Commission but were issued only one ID Number by the SSS. Private respondent claiming to
be an employee of both bus lines with one ID Number filed a petition by the Social Security
Commission to compel BTI to remit to SS private respondents SSS Premium contributions. He
alleged that he was employed by petitioner as conductor and later as inspector with
corresponding salary increases and the petitioner deducted from his salaries, premium
contributions but was remitted to the SSS a lesser amount. On the contention of the petitioner,
they denied having employed private respondent Ramon Martinez, the truth being the he
employed by Pascual Tuazon who owned and operated buses which were separate and distinct
from the buses of the petitioner. The employment of private respondent lasted until when his
employer Pascual Tuazon became bankrupt. It was the moment when the deduction from the
private respondent contributions for the years in question. Moreover, there were witnesses
present which stated that the two buses has granted separate franchises to operate public utility
buses, both operating between Manila and Baliuag routes. It was also being question that the
private respondent brought the action which was already prescribed.
ISSUE
Whether or not the cause of action had already prescribed.
RULING
Yes. Private respondent having allowed seventeen (17) years to elapse before filing the petition
with the SSS has undoubtedly slept on his rights and his cause of action has already prescribed
under Article 1144 (2) of the Civil Code which states that The following action must be brought
within ten-year period from the time the right of action accrues:
(2.) Upon and obligation created by law.

18. G.R. No. L-41427 June 10, 1988

CONSTANCIA
C.
vs.
COURT OF APPEALS and CONSUELO DAVID, respondents

TOLENTINO, petitioner,

FACTS
The petitioner is the present legal wife of Arturo Tolentino, while Respondent Consuelo David
was legally married to Arturo Tolentino on February 8, 1931. Their marriage likewise produced
children. The marriage was dissolved and terminated pursuant to the law during the Japanese
occupation by a decree of absolute divorce granted by the Court of First Instance of Manila on
the ground of desertion and abandonment by the wife. The trial court granted the divorce on its
finding that Arturo Tolentino was abandoned by Consuelo David for at least three (3) continuous
years.
Thereafter, Arturo Tolentino married a certain Pilar Adorable, who however, died soon after their
marriage. Tolentino subsequently married Constancia. Consuelo David, on the other hand,
continued using the surname Tolentino after the divorce and up to the time of the filing of this
complaint. There was the issue raised that the petitioners cause of action had been prescribed
because she then filed a complaint not upon knowing of the fact that private respondent are
using the surname of Tolentino.
ISSUE
Whether or not the petitioner's cause of action has already prescribed
RULING
Yes. The respondent Court of Appeals, on the other hand, is of the opinion that the period of
prescription should be four (4) years, since it appears to be an action based on quasi-delict.
hatever the period, it cannot be denied that the action has long prescribed whether the cause
accrued on April 21, 1945 when the petitioner and Arturo Tolentino got married, or on August
30, 1950, when the present Civil Code took effect, or in 1951 when Constancia Tolentino came
to know of the fact that Consuelo David was still using the surname Tolentino. It is the legal
possibility of bringing the action which determines the starting point for the computation of the
period of prescription.
The petitioner should have brought legal action immediately against the private respondent after
she gained knowledge of the use by the private respondent of the surname of her former
husband. As it is, action was brought only on November 23, 1971 with only verbal demands in
between and an action to reconstitute the divorce case. The petitioner should have filed her
complaint at once when it became evident that the private respondent would not accede to her
demands instead of waiting for twenty (20) years.

19. G.R. No. 72645 June 30, 1987

LUZON
SURETY
COMPANY,
INC., petitioner,
vs.
INTERMEDIATE APPELLATE COURT, and EUGENIA G. PUYAT, GIL G. PUYAT, JR.,
ANTONIO G. PUYAT, VICENTE G. PUYAT, VICTOR G. PUYAT, JESUS-PUYATCONCEPCION, ALFONSO G. PUYAT, and EUGENIA PUYAT-JOSON, respondents.
FACTS
There was this case with the petitioner against the Material Distributor, Inc. and judgment was
rendered against the defendants, including Gil Puyat, for the principal sum of P20,000.00 with
interest at the rate of 12% computed and compounded quarterly from June 25, 1958, and the
further sum of P3,608.00 representing premiums and stamps. The judgment became final on
April 13, 1967, but was not enforced. However, Gil Puyat died and there was a claim against his
estate that was filed but his administrators oppose the claim for the reason that it is
unenforceable and barred by laches for no steps were taken by the claimant to secure a writ of
execution against defendant Gil Puyat during his lifetime to enforce the judgment. The RTC
dismissed the case which was affirmed by the Intermediate Appellate Court. The prescription of
cause of action which was raised as an issue for the case at bar for the execution of the final
judgment.
ISSUE
Whether or not the petitioners cause of action had been prescribed.
RULING
Yes. This is whether the ten-year prescriptive period to file an action to enforce a judgment
pursuant to Article 1144(3) of the New Civil Code commences to run from the finality of the
original judgment or from the revived judgment. The 10-year prescriptive period must
commence from the finality of the original judgment. However, the failure of the private
respondents to raise prescription in their "Comment to Claim" does not imply the waiver of such
defense. In the instant case, there is no new issue of fact that arises in connection with the
question of prescription. All the pertinent dates showing that the petitioner's enforcement of the
judgment has already prescribed can be found in the petitioner's allegations in the "claim" as
well as its evidence. This removes the case from the general rule that prescription if not
impleaded in the answer is deemed waived.
20. G.R. No. L-61352 February 27, 1987
DOLE
PHILIPPINES,
vs.
MARITIME COMPANY OF THE PHILIPPINES, defendant-appellee

INC., plaintiff-appellant,

FACTS
The cargo subject of the instant case was discharged in Dadiangas unto the custody of the
consignee. The corresponding claim for damages sustained by the cargo was filed by the
petitioner with the respondent vessel. The petitioner brought an action with three (3) causes of
action involving three separate and different shipments. The third cause is the main issue of the
case. The RTC dismissed the complaint since there was already settlement and compromise
happened but the third issue is not part of the compromise or settlement. The petitioner
instituted the present complaint and the RTC granted moved for preliminary hearing but the
respondent filed a motion to dismiss on the ground of prescription. The RTC dismissed the
complaint and denied the motion for reconsideration filed by petitioner.
ISSUE
Whether or not the petitioner cause of action had already prescribed.
RULING
YES. No different result would obtain even if the Court were to accept the proposition that a
written extrajudicial demand does toll prescription under the Carriage of Goods by Sea Act. The
demand in this instance would be the claim for damage-filed by Dole with Maritime. The effect of
that demand would have been to renew the one- year prescriptive period from the date of its
making. Unfortunately, Dole let the new period lapse without filing action. It instituted an action
for the new civil case more than one month after that period has expired and its right of action
had prescribed. Well within the one-year prescriptive period in Sec. 3(6) of the Carriage of
Goods by Sea Act." equates tolling with indefinite suspension. It is clearly fallacious and merits
no consideration.
21. G.R. No. L-44338 April 15, 1988
ROSARIO
C.
BUCCAT, plaintiff-appellee,
vs.
LIBRADA ROSALES DISPO, Assisted by Her Husband PROCESO DISPO, defendantsappellants.
FACTS
The petitioner Rosario Buccat and respondent Librada Dispo entered into a contract of lease,
the expiration date of which was August 31, 1967, over the former's 542-square meter lot
situated at Bo. Catbangen, San Fernando, La Union. By virtue of the said contract, the
respondent constructed the National Business Institute, a small vocational school on the parcel
of land subject of the lease agreement. Afterwards, nine years before the expiration of the
contract, the parties entered into another lease agreement over the same parcel of land
substantially modifying the duration of the lease that the lease contract shall remain in full force
and effect as long as the land will serve the purpose for which it is intended as a school site of
the National Business Institute but the rentals now stipulated shall be subject to review every
after ten (10) years by mutual agreement of the parties.

However, eight months after the supposed expiration date of the first contract, the petitioner
filed a complaint for Unlawful Detainer against respondent, the basis of which was the expiration
of the first lease contract, as the second agreement, according to petitioner, was null and void
for being simulated and for want of consideration. The second contract was allegedly executed
only after "respondent approached the petitioner and revealed to the latter their problems and
difficulty in securing the official recognition by the government of the National Business
Institute". The trial court dismissed the complaint on the ground of prescription.
ISSUE
Whether or not the petitioner has the right of action in fixing the period of lease.

RULING
Yes. The cause of action for the fixing of the period of lease accrued. This is as it should be
because prior to that, the validity of the second contract of lease was being challenged. The
case for unlawful detainer filed by the petitioner became in fact a case questioning the validity of
the second contract on the grounds that the said contract was simulated and that there was no
consideration. The petitioner could not have been expected to file an action for the fixing of the
period of the lease before the Court of Appeals promulgated its decision because she was not
yet aware that the said paragraph of the second contract was a provision that called for an
indefinite period. For the reason that the very existence, and subsequently, the interpretation of
the second contract of lease, particularly par. 3 thereof, were put in issue in the unlawful
detainer case, the court trying the case was required to interpret the provisions of, and
consequently, rule on the validity of the said contract. The remedy or the cause of action for the
filing of a case for the fixing of a period in the contract, therefore, only accrued when the court
finally declared the second contract valid but that the provision as to the period was indefinite
and hence, an action for the fixing of the period of the contract had to be filed.

22.

[G.R.

No.

73198.

September

2,

1992.]

PRIVATE DEVELOPMENT CORPORATION OF THE PHILIPPINES, Petitioner, v. THE

INTERMEDIATE APPELLATE COURT AND ERNESTO C. DEL ROSARIO, Respondents.
FACTS
Davao Timber Corporation, DATICOR for brevity, and the Private Development Corporation
(PDCP) entered into a loan agreement 3 whereby PDCP extended to DATICOR a loan in
foreign currency for the purpose of establishing a kiln drying and woodworking plant in Mati,
Davao Oriental. It was stipulated in the loan agreement that the foreign currency loan was to be
paid with an interest rate commencing on the several dates on which disbursements of the
proceeds
of
the
loans
were
made.
DATICOR likewise executed a Deed of Chattel Mortgage 8 on the machineries and equipments

attached to the land in Davao Oriental as added security for said loans. PDCP asked DATICOR
to pay a service fee of one (1%) per cent per annum on the outstanding balance of the peso
loan to cover the cost of administering DATICORs account and supervision of the project.
PDCP initiated extra-judicial foreclosure proceedings 12 against the parcel of land owned by Del
Rosario in Manila and the five (5) parcels of land owned by DATICOR in Davao Oriental.
DATICOR filed case in the Court of First Instance of Davao Oriental seeking a writ of injunction
to prevent PDCP from foreclosing its properties in Davao, and likewise praying for the
annulment of the loan contract as it is in violation of the Usury Law and damages. They
rendered decision dismissing the complaint. However, the Intermediate Appellate Court
reversed the decision and rendered that the loan agreement is declaring void and no effect of
stipulations of interest.
ISSUE
Whether or not the cause of action had prescribed
RULING
NO.

With

regard

to

the

first

contention,

Article

1957

of

the

Civil

Code

". . . contracts and stipulations, under any cloak or device whatever, intended to circumvent the
law
against
usury
shall
be
void."
Furthermore,

Article

1410

provides:

"The action or defense for the declaration of the inexistence of a contract does not prescribe."
The aforesaid articles therefore state that all usurious stipulations are void and as such, an
action to annul such usurious stipulations does not prescribe. The aforesaid articles therefore
state that all usurious stipulations are void and as such, an action to annul such usurious
stipulations does not prescribe.

23.

Mataas na Lupa Tenants Association vs Carlos Dimayuga and Juliana Diego Vda.
De Gabriel (L-32049, June 25, 1984)

FACTS:
Petitioners filed a complaint for the exercise of preferential rights with the then Court of
First Instance of Manila, Branch IV alleging that the Contract of Sale executed by Juliana Diez
Vda. De Gabriel with Carlos Dimayuga is expressly prohibited by law as it is mandated for the
respondent to execute such sale to petitioners. Therefore said contract should be declared null
and void. The lower court ruled in favour of the respondents, ordering the dismissal of the case
on the ground that petitioners failed to state a cause of action. Thus petitioners resorted to the
petition of certiorari for the review of the said order before the SC.
ISSUES:
1. Whether or not the contract of sale is null and void

2. Whether or not the petitioners may invoke their preferential rights as tenants
HELD/RULING:
1. Yes. The R.A. 1162 as amended by R.A. 2342 and 3516 set forth the following
conditions that of offering first the sale of the land to petitioners and the latter's
renunciation in a public instrument-were not met when the land was sold to
respondent Dimayuga. Evidently, said sale is illegal and therefore void. The 1973
Constitution section 6, article II emphasizes the stewardship concept that such private
property is supposed to be held by the individual only as trustee for the people in general, who
are its real owners. As a mere steward, the individual must exercise his right to the property not
for his own exclusive and selfish benefit but for the good of the entire community. P.D. 1157
Proclaiming Urban Land Reform in the Philippines and providing for the Implementing
Machinery thereof. superseded R.A. 1152, 2342, 3516.
2. Yes. This decree is firmly based on sec. 6 of art. II of the 1973 constitution
undoubtedly adopts and crystallizes the greater number of people criterion when it speaks of
tenants and residents in declared urban land reform zones or areas without mention of the land
area covered by such zones. The focus therefore, is on people who would benefit
and not on the size of the land involved. Under section 6 of which also states that tenantfamilies have been vested the right of first refusal to purchase of the land within a
reasonable time and reasonable price subject to the rules and regulations of the
Ministry of Human Settlements. It is further supported by PD 1967 which evidently
include Mataas na Lupa, the land in controversy within the Urban Land Reform Zone.

24.

Leonides Pengson vs CA (GR L-65622 June 29, 1984)

FACTS:
The defendant Pacific Merchandising Corporation is the owner of shares in the
Aluminum Products (Alpro) to the extent of 96% of its capital (share) holdings. PMC was
indebted to defendant Reynolds Philippines Corporation, in the sum of more than P800,000.00,
because of which indebtedness its shares in the Alpro were pledged with Reynolds as a
collateral of its loan. Because PMC needed some money, it decided to sell its shares with the
Alpro to the herein plaintiff Leonides C. Pengson', the deed of sale being evidenced by Exhibit
A. Among other things, the plaintiff assumed the obligation of PMC to Reynolds, which amount
however was reduced from more than P800,000.00 to only P500,000.00. Since the certificates
covering the shares were then held by Reynolds in pledge as security for PMC obligation, the
former's consent to the sale with assumption had to be obtained. As a security for the payment
to Reynolds of the aforesaid P500,000.00 in five (5) annual installments, the first installment
being P125,000.00. Pengson mortgaged to Reynolds a parcel of land. While Pengson paid the
first installment in the sum of P125,000.00 in three (3) installments and a bit late, the next in
installments which fell due were not paid for in spite of demands. Consequently, Reynolds
foreclosed by considering an unpaid installments due and demandable.
ISSUE:
Whether or not Reynolds Phil. Corporation is entitled to surrender the said certificates of
stocks to Leonidas Pengson.

HELD/RULING:
No. Reynolds was not a party to the contract of sale between PMC and the herein
plaintiff. This being so, it had no obligation whatsoever on the strength of the contract ii favor of
the plain. Plaintiff, by the terms of the contract, however, since plaintiff undertook to pay PMC
obligation to Reynolds, plaintiff was under obligation with the PMC on account of the said
undertaking. Otherwise, there is absolutely no reciprocal obligation between the herein plaintiff
and the appellant Reynolds. Otherwise said, the new debtor of Reynolds was the plaintiff and no
longer PMC To argue now, as the plaintiff contends, that Reynolds was under an obligation to
return the certificates of stocks pledged to it by PMC is to put the plaintiff in a better footing than
PMC was with Reynolds. There is absolutely no agreement by Reynolds to that effect in the
consent it gave to the sale by PMC of the said shares in favor of the plaintiff.
25.

Phil. National Bank vs CA (SCAD, 1996)

FACTS:
Respondent Carmelo H. Flores purchased from petitioner at its Manila Pavilion
Hotel unit, two (2) managers checks worth P500,000.00 each, paying a total of P1,000,040.00,
including the service charge. A receipt for said amount was issued by the petitioner.
Flores presented these checks at the Baguio Hyatt Casino unit of petitioner. Petitioner
refused to encash the checks but after a lengthy discussion, it agreed to encash one (1) of the
checks. However, it deferred the payment of the other check until after Flores agreed that it be
broken down to five (5) managers checks of P 100,000.00 each. Petitioner refused to encash
one of the five checks until after it is cleared by the Manila Pavilion Hotel unit. Having no other
option, Flores agreed to such an arrangement. However, upon his return to Manila, he made
representations to petitioner through its Malate Branch so that the check may be encashed but
to no avail. Flores, thereafter, wrote a letter to his counsel informing the latter of the
aforementioned events. A Formal Demand was made by private respondents counsel but
petitioner persisted in its refusal to honor the check. Flores filed a case with the Regional Trial
Court of Quezon City, Branch 100.
ISSUE:
Whether or not the CA erred in law holding that the best evidence to show whether Mr.
Flores paid the unit is the issuance of receipt worth P1, 000, 040
HELD/RULING:
No. A receipt is defined as A written and signed acknowledgment that money has
been paid or goods have been delivered. A receipt is merely presumptive evidence and is not
conclusive. A written acknowledgment that money or a thing of value has been received. Since
a receipt is a mere acknowledgment of payment, it may be subject to explanation or
contradiction. A receipt may be used as evidence against one just as any other declaration or
admission. A simple receipt not under seal is presumptive evidence only and may be rebutted or
explained by other evidence of mistake in giving it, or of non-payment or of the circumstances
under which it was given. A local bank, while acting as local correspondent bank, does not have
the right to intercept funds being coursed thru it by its foreign counterpart for transmittal and
deposit to the account of an individual with another local bank, and thereafter apply the said
funds to certain obligations owed to it by the said individual.

26.Heirs of Luis Bacus et. al vs CA and Spouses Faustino and Victoriana Duray (GR
127695 Dec. 3, 2001)
FACTS:
On 1984 Luis Bacus leased to Faustino Duray a parcel of agricultural land with total land
area of 3,002 of square meters, in Cebu. The lease was for six years ending in 1990, the
contract contained an option to buy clause. Under the said option, the lessee had the exclusive
and irrevocable right to buy 2,000 square meters 5 years from a year after the effectivity of the
contract, at P200 per square meter. That rate shall be proportionately adjusted depending on
the peso rate against the US dollar, which at the time of the execution of the contract was 14
pesos. Close to the expiration of the contract Luis Bacus died on 1989, after Duray informed the
heirs of Bacus that they are willing and ready to purchase the property under the option to buy
clause. The heirs refused to sell, thus Duray filed a complaint for specific performance against
the heirs of Bacus. He showed that he is ready and able to meet his obligations under the
contract with Bacus. The RTC ruled in favor of the Durays and the CA later affirmed the
decision.
ISSUE:
Whether or not the heirs of Luis Bacus be compelled to sell the portion of the lot under
the option to buy clause.

HELD/RULING:
Yes, Obligations under an option to buy are reciprocal obligations. The performance of
one obligation is conditioned on the simultaneous fulfilment of the other obligation. In other
words, in an option to buy, the payment of the purchase price by the creditor is contingent upon
the
execution
and
delivery
of
the
deed
of
sale
by
the
debtor.
When the Durays exercised their option to buy the property their obligation was to advise the
Bacus of their decision and readiness to pay the price, they were not yet obliged to make the
payment. Only upon the Bacus actual execution and delivery of the deed of sale were they
required to pay. The Durays did not incur in delay when they did not yet deliver the payment nor
make a consignation before the expiration of the contract. In reciprocal obligations, neither party
incurs in delay if the other party does not comply or is not ready to comply in a proper manner
with what is incumbent upon him. Only from the moment one of the parties fulfills his obligation,
does delay by the other begin.

27.
FACTS:

Canonizado vs Benitez (L-49315, L-60966 Feb. 20, 1984)

The petitioner filed an action for support against her estranged husband, the private
respondent in the Juvenile and Domestic Relations Court of Manila. The trial court granted the
claim but denied similar support for the petitioner on the ground that she was gainfully
employed. The petitioner questioned this decision in a petition for certiorari with this Court.
When the corresponding writ of execution was issued, the respondent filed an action in the
Court of First Instance to restrain the sale by public auction of certain properties over which he
claimed to have lost ownership. An alias writ of execution was issued but was not satisfied
because of an order of the court. A decision on the merits was promulgated by the Juvenile and
Domestic Relations Court awarding arrearages in support pendente lite to both the petitioner
and her daughter, this decision was affirmed on appeal, with modification. This became final
and executor.

ISSUE:
Whether or not the implementation of Writ of Execution is valid.
HELD/RULING:
Yes, the implementation is valid. The writ of execution ordered is not affected by that
motion. Such support has already become due and has acquired the character of vested rights
accruing to the petitioner and the daughter Christina.
The other possible reason for the respondent judge's delay in implementing the writ of execution
is a second pending motion this time to restrain levy on the ground that the properties sought to
be taken are the same properties declared exempt in the order of May 20, 1963. The court
noted, though, that as worded the alias writ of execution issued by the respondent judge
covers other properties of the private respondent that can answer for the payment of the support
in arrears. While mandamus is not available to control discretion, it may nevertheless issue to
compel the performance of a ministerial act, as in this case. The writ of execution having been
authorized and directed by this Court, the only task of the respondent judge is to issue and
enforce it. As the properties exempt from execution have already been determined, the
respondent judge should now order the enforcement of the writ against the other properties of
the private respondent not exempt from execution. That is a ministerial act that can be, as it is
hereby, compelled.

28.

Serrano vs Central Bank (L-30511 Feb. 14, 1980)

FACTS:
Manuel Serrano made a time deposit, for one year with 6%interest of One Hundred Fifty
Thousand
pesos
with
the
respondent
Overseas
Bank
of
Manila.
Concepcion Maneja also made a time deposit, for one year with 6-1/2% interest, of Two
Hundred Thousand Pesos on the same respondent Overseas Bank of Manila. Concepcion
Maneja, the married, assigned and conveyed to petitioner Manuel Serrano, her time deposit of
Php 200, 000. Notwithstanding series of demands for encashment of theaforementioned time
deposit from the respondent Overseas Bank of Manila, not a single one of the time deposit
certificates was honored by respondent Overseas Bank of Manila. Respondent Central Bank
dissolved and liquidated the Overseas Bank of Manila. The former denied that it is

a guarantor of
thepermanent solvency of any banking institution as claimed by thepetitioner.
Respondent Central Bank avers no knowledge of petitioners claim that the properties given by
the respondent Overseas Bank of Manila as additional collaterals to the respondent Central
Bank of The Philippines for the formers overdrafts and emergency loans were acquired from
the depositors money including the time deposits of the petitioner. The Philippines for the
formers overdrafts and emergency loan were acquired from the depositors money including the
time deposits of t h e p e t i t i o n e r .
ISSUE:
Whether or not the respondents are jointly and solidary liable for damages due to breach
of trust.
HELD/RULING:
No. Both parties overlooked the fundamental principle in the nature o f b a n k
d e p o s i t s w h e n t h e p e t i t i o n e r c l a i m e d t h a t t h e r e s h o u l d b e created a
constructive trust in his favor when the respondent Overseas Bank of Manila increased the
collaterals
in
favour
of
the
respondent
C e n t r a l B a n k o f t h e P h i l i p p i n e s f o r t h e f o r m e r s o v e r d r a f t s a n d emer
gency loans, since these collaterals were acquired by the use of depositors money. Bank
deposits are in nature of irregular deposits. They are really loans because they earn interest. All
kinds of bank deposits, whether f i x e d , s a v i n g s o r c u r r e n t a r e t o b e t r e a t e d a s
l o a n s a n d a r e t o b e covered by the loans. Current and savings deposits are loans to a
bank because it can use the same. The petitioner here in the making time deposits
that earn interests with respondent Overseas Bank of Manila was in reality a creditor of the
respondent bank and not a depositor. The respondent bank was in turn a debtor
of petitioner. Failure of the respondent bank to honor the time deposit is failure to pay obligation
as a debtor and not a breach of trust arising from depositorys failure to return the subject matter
of the deposit.

29.

Santos vs CA (L-60210 March 27, 1984)

FACTS:
This is an Appeal by certiorari from the decision of the then Court of Appeals in CA-G.R.
No. SP-13056, affirming the one rendered by the then Court of First Instance of Manila, Branch
XVI. Herein private respondent Aurora Gutierrez instituted an unlawful detainer case in the then
City Court of Manila against herein petitioners Arturo P. Santos and Adelina Y. Santos on
grounds that she needs the premises for her personal use and the necessity of repairs thereon,
and
that
the
petitioners
were
delinquent
in
the
payment
of
rentals.
In their Answer with Counterclaim, Petitioners, among others, admitted that they are "the
legitimate tenants and/or lessees of the subject apartment with the present rental rate of
P250.00 a month on a month-to-month contract of lease."
ISSUE:
Whether or not the CA erred in affirming the decision of the lower court.
HELD/RULING:

No. Paragraph 1 of Article 1673 of the Civil Code is an exception to Section 4 of Presidential
Decree
No.
20.
Said
Section
1
of
Article
1673
provides
that
" The lessor may judicially eject the lessee for any of the following causes :(1) When the period
agreed upon, or that which is fixed for the duration of lease under article 1682 and 1687, has
expired;"

Thus, judicial ejectment lies when the lease is for a definite period or when the fixed or
definite period agreed upon has expired. The lease in the case at bar having a definite period, it
follows that private respondents right to judicially eject petitioners from the premises may be
enforced. As aptly stated by respondent Court of Appeals, If both land and the building belong
to the lessor, the right referred to hereinabove does not apply."

30.

Gonzales vs PNB (GR 33320 May 30, 1983)

FACTS:
Petitioner Ramon A. Gonzales instituted in the erstwhile Court of First Instance of Manila
a special civil action for mandamus against the herein respondent praying that the latter be
ordered to allow him to look into the books and records of the respondent bank in order to
satisfy himself as to the truth of the published reports that the respondent has guaranteed the
obligation of Southern Negros Development Corporation in the purchase of a US$ 23 million
sugar-mill to be financed by Japanese suppliers and financiers; that the respondent is financing
the construction of the P 21 million Cebu-Mactan Bridge to be constructed by V.C. Ponce, Inc.,
and the construction of Passi Sugar Mill at Iloilo by the Honiron Philippines, Inc., as well as to
inquire into the validity of Id transactions. The petitioner has alleged hat his written request for
such examination was denied by the respondent. The trial court having dismissed the petition
for mandamus, the instant appeal to review the said dismissal was filed.
ISSUE:
Whether or not a stockholder of PNB can insist on the inspection of its books.
HELD/RULING:
No. The court a quo denied the prayer of the petitioner that he be allowed to examine
and inspect the books and records of the respondent bank regarding the transactions
mentioned on the grounds that the right of a stockholder to inspect the record of the business
transactions of a corporation granted under Section 51 of the former Corporation Law is not
absolute, but is limited to purposes reasonably related to the interest of the stockholder, must be
asked for in good faith for a specific and honest purpose and not gratify curiosity or for
speculative or vicious purposes; that such examination would violate the confidentiality of the
records of the respondent bank as provided in Section 16 of its charter, Republic Act No. 1300,
as amended; and that the petitioner has not exhausted his administrative remedies.

31.
FACTS:

Hilario Javarata vs Sandiganbayan (L-56170 Jan. 31, 1984)

That on or about the period from April 30, 1979 to May 25, 1979, in the Municipality of
Tubao, Province of La Union, Philippines, and within the jurisdiction of this Honorable Court, the
abovenamed accused, being then the Assistant Principal of the Leones Tubao, La Union
Barangay High School and with the use of his influence as such public official and taking
advantage of his moral and official ascendancy over his classroom teachers, with deliberate
intent did then and there wilfully, unlawfully and feloniously made demand and actually received
payments from other classroom teachers, ROMEO DACAYANAN, DOMINGO LOPEZ,
MARCELA BAUTISTA, and FRANCISCO DULAY various sums of money, namely: P118.00,
P100.00, P50.00 and P70.00 out of their salary differentials, in consideration of accused having
officially intervened in the release of the salary differentials of the six classroom teachers, to the
prejudice and damage of the said classroom teachers, in the total amount of THREE
HUNDRED THIRTY EIGHT (P338.00) PESOS, Philippine Currency.
ISSUE:
Whether or not Jaravata violated the Anti Graft and Corrupt practices Act.
HELD/RULING:
No. There is no law which invests the petitioner with the power to intervene in the
payment of the salary differentials of the complainants or anyone for that matter. Far from
exercising any power, the petitioner played the humble role of a supplicant whose mission was
to expedite payment of the salary differentials. In his official capacity as assistant principal he is
not required by law to intervene in the payment of the salary differentials. Accordingly, he
cannot be said to have violated the law afore-cited although he exerted efforts to facilitate the
payment of the salary differentials.

32.

Ganzon vs Judge Sancho (GR 56450 July 23, 1983)

FACTS:
On August 28, 1979, petitioner Rodolfo Ganzon initiated proceedings to extra-judicially
foreclose a real estate mortgage executed by the private respondents in his favor. The
mortgage covered a parcel of residential land of the subdivision plan located in the District of
Molo, Iloilo City Thereafter, petitioner Gregorio Lira served personal notice of the foreclosure
proceedings on the private respondents. A day before the scheduled public auction, the private
respondents filed a civil action for specific performance, damages, and prohibition with
preliminary injunction against the petitioners with the respondent court. The private respondents
asked for the issuance of a writ of preliminary injunction to enjoin the petitioners from
proceeding with the foreclosure and public auction sale. Acting on the urgent ex-parte motion of
private respondents, the trial court issued an order enjoining the provincial sheriff from
proceeding with the scheduled auction sale on September 28, 1979.
Private respondents filed an amended complaint. On March 28, 1980 the petitioners filed
their answer to the amended complaint; they further maintained that the extra-judicial
foreclosure proceedings would be in accordance with the terms and conditions of the said
mortgage. After the issues had been joined but before actual trial, the private respondents filed
a "Motion For Release Of Real Estate And For The Clerk Of Court To Accept Bond Or Cash In
Lieu Thereof," to which the petitioners interposed an Opposition. The respondent court granted
the respondents' motion. The petitioners filed an Urgent Motion for Reconsideration Of the

Order and Opposition To The Approval of Surety Bond. The respondent court in its order denied
the aforesaid motion

ISSUE:
Whether or not the trial court may order the cancellation of a mortgage lien annotated in
a Torrens Certificate of Title to secure the payment of a promissory note and substitute such
mortgage lien with a surety bond approved by the same court to secure the payment of the
promissory note.
HELD/RULING:
Yes, the court may order the cancellation of a mortgage lien. At the pre-trial, what the
parties admitted were the existence and due execution of the documents, including the absolute
deed of sale of realty and the subject real estate mortgage. In connection with the documents,
the issues per the pre-trial order were "... whether or not the documents express the true
intention of the parties, and whether or not they complied with the provisions of the document.
Hence, at that stage of the case, the trial court's order dated November 20, 1980 had no factual
basis. Even on the assumption that the factual bases of the trial court's questioned orders were
justified by evidence in the records the same would still not be proper. A mortgage is but an
accessory contract. "The consideration of the mortgage is the same consideration of the
principal contract without which it cannot exist as an independent contract."

33.

Molave Motor Sales, Inc. vs Laron and Geminiano (L-65377 May 28, 1984)

FACTS:
Petitioner is a corporation engaged in the sale and repair of motor vehicles in Dagupan
City. Private respondent in the case below, was, or is, the sales manager of Petitioner. Alleging
that the respondent was a former employee, Petitioner had sued him for payment of accounts
pleaded as that during his incumbency as such the defendant caused and without authority from
the plaintiff incurred accounts with the remaining balances in the total sum of P33,890.38
excluding interests, arising from the purchases of vehicles and parts, repair jobs of his personal
cars and cash advances, faithful reproductions of the Vehicle Invoice, Debit Memos, Deed of
Absolute Sale, Repair Orders, Charge Invoices, Vouchers, Promissory Notes,
Acknowledgement Letter and Statement of Account. In his Answer, The Respondent denied.
He further alleged in a counterclaim that he should still be considered an employee of Petitioner
inasmuch as there has been no application for clearance in regards to his separation. At the
pre-trial conference, the Respondent raised the question of jurisdiction of the Court stating that
Petitioners complaint arose out of employer-employee relationship, and he subsequently
moved for dismissal. It was then when respondent Judge dismissed the case finding that the
sum of money and damages sued upon arose from employer-employee relationship and that
jurisdiction belonged to the Labor Arbiter and the NLRC.

ISSUE:
Whether or not the Civil Code is the governing statute in the instant case.
HELD/RULING:
Yes, the Civil Code is the governing statute. It is obvious from the complaint that the
plaintiffs have not alleged any unfair labor practice. Theirs is a simple action for damages for
tortious acts allegedly committed by the defendants. Such being the case, the governing statute
is the Civil Code and not the Labor Code. It results that the orders under review are based on a
wrong premise. In the case below, Petitioner had sued for monies loaned to Respondent, the
cost of repair jobs made on his personal cars, and for the purchase price of vehicles and parts
sold to him. Those accounts have no relevance to the Labor Code. The cause of action was one
under the civil laws, and it does not breach any provision of the Labor Code or the contract of
employment of Respondent. Hence, the civil courts, not the Labor Arbiters and the NLRC,
should have jurisdiction.

34.

Borcena et. al vs IAC (GR 70099 Jan. 7, 1987)

FACTS:
On July 6, 1981, the petitioners engaged the legal services of respondent Gil P. de
Guzman, hereby retaining and employing the services of e Guzmans Legal office towards its
prosecution. On this same date, respondent de Guzman filed a complaint for damages against
the Metropolitan Waterworks and Sewerage System, Nam Kwang, Socea Bonna and Chun Bae
Kim. Atty. de Guzman filed a motion for preliminary attachment praying that an order be issued
attaching properties of the defendants thereof representing attorney's fees, or a total of P852,
000.00. The motion was granted upon plaintiffs' posting a bond of P852, 000.00 issued by a
bonding company acceptable to the court. The motion was denied. The court directed the
MWSS to turn over the P852,000.00 to the deputy sheriff and for the latter to deposit the same
with the Sta. Maria Municipal Treasurer. De Guzman filed a manifestation questioning the
restriction on the checks that the same be deposited only with the Municipal Treasurer of Sta.
Maria, Bulacan as uncalled for and contrary to the court's order. Atty. Perpetuo L. B. Alonzo
entered his appearance as new counsel for the petitioners. Atty. de Guzman filed an opposition
to Gimeno's ex-parte motion to transfer deposit of garnished amount. Atty. de Guzman filed an
attorney's lien on the garnished amount of P852,000.00 pursuant to Section 26 of Rule 138. The
petitioners filed a manifestation. The lower court denied the petitioners' motion for
reconsideration and opposition to the motion for execution pending appeal, and granted the
motion for execution pending appeal. The Intermediate Appellate Court denied due course to
the petition questioning the execution pending appeal.
ISSUE:
Whether or not Atty. Gil de Guzman is entitled for his legal services to the petitioners
HELD/RULING:

Yes. Contracts for attorney's services in this jurisdiction stand upon an entirely different
footing from contracts for the payment of compensation for any other services. By express
provision of section 29 of the Code of Civil Procedure, an attorney is not entitled in the absence
of express contract to recover more than a reasonable compensation for his services; and even
when an express contract is made the court can ignore it and limit the recovery to reasonable
compensation if the amount of the stipulated fee is found by the court to be unreasonable. This
is a very different rule from that announced in section 1091 of the Civil Code with reference to
the obligation of contracts in general where it is said that such obligation has the force of law
between the contracting parties.
35. [G.R. No. 119231. April 18, 1996]
PHILIPPINE NATIONAL BANK, petitioner, vs. HON. PRES. JUDGE BENITO C. SE, JR.,
RTC, BR. 45, MANILA; NOAHS ARK SUGAR REFINERY; ALBERTO T. LOOYUKO, JIMMY
T. GO and WILSON T. GO, respondents
Facts:
Noahs Ark Sugar Refinery issued a receipt to RNS Merchandising (Rosa Ng Sy); (c) and
Receipt No. 18081, covering sugar deposited by St. Therese.it was later negotiated to
Cresencia K. Zoleta and Luis T. Ramos.the quedans were used as security loan for the amount
of P15.6 million and the other for P23.5 million from the PNB.ramos and zoleta failded to pay
the loan and request Noahs Ark Sugar Refinery for the delivery of the sugar stocks covered
by the quedans endorsed by Zoleta and Ramos.the refusal of Noah ark sugar refinery to deliver
the said sugar stocks prompted the PNB to file a case demanding the delivery of the said sugar
stock.THE RTC denied the petition and was brought up to the CA and was affirmed by the
Supreme court.the respondent file an Omnibus Motion seeking deferment of the proceedings
until private respondents are heard on their claim for warehousemans lien. On the other the
Philippine National Bank filed a Motion for the Issuance of a Writ of Execution and an
Opposition to the Omnibus Motion filed by private respondents.
Issue:whether or not the Noahs Ark Sugar Refinery is subject for payment of storage fee
in sugar stocks.
Ruling:
Warehouse Receipts provision pursuant to Sections 27 and 31 of the Warehouse Receipts Law (R.A. 2137)
that the respondent rivate respondents cannot legally be deprived of their right to enforce their
claim for warehousemans lien, for reasonable storage fees and preservation expenses. case
was dismissed fro lack of merit
36. G.R. No. L-60151 June 24, 1983
SALVADOR L. BUDLONG, in his capacity as Acting Third Assistant City Fiscal, City of
Tagbilaran,
petitioner,
vs.
HONORABLE AQUILES T. APALISOK, in his capacity as Acting City Judge, City Court,
Branch II, City of Tagbilaran, and CAMILIO PUYO Y GALAGAR, respondents.

Facts:
The private respondent was charged with physical injuries and pleaded guilty before the
court and the respondent judge for the said crime and was convicted without saying
anything about the civil liability of the said private respondent.private respondent applied
for probation there after. Petitioner herein filed a separate civil case but respondent deny
the motion with reason that the case was already close and terminated. Hence, this
petion for grave abuse of discretion against the respondent judge.
Issue: whether or not the respondent judge committed grave abuse of discretion in
denying the motion to hear the civil case of the petitioner contending that the case had
been terminated and closed.
Ruling:
The respondent judge committed grave abuse of discretion in denying the motion to try
the civil case by the petitioner contending that the conviction of the private respondent
from criminal case does not include civil liability as stated in art 113 of the revised penal
code.

37. G.R. No. L-39999 May 31, 1984

ROY PADILLA, FILOMENO GALDONES, ISMAEL GONZALGO and JOSE FARLEY
BEDENIA,
petitioners,
vs.
COURT OF APPEALS, respondent.
Facts:
Petioners herein where charged of grave coercion where they were convicted in the CFI
but the court of appeals reversed the decision and acquitted them of the criminal
charged on the ground of reasonable doubt but directing them to pay jointly and
severally the amount of P9,600.00 to the complainants as actual damages.Hence, this
petion for certiorari contending that they acquittal in the criminal case should also acquit
them in their civil liabilities.
Issue: whether or not the acquittal of the petitioner also extinguishes their civil liabilities.
Ruling:
The decision of the Court of appeals is affirmed contending that the acquittal of the
petitioner in the criminal case did not extinguish their civil liabilities in Section 3 (c) of
Rule 111 and Article 29 of the Civil Code does not require proof beyond reasonable doubt
for the conviction in civil case.

38. G.R. No. L-49781 TO L-49791 June 24, 1983

THE
PEOPLE
OF
THE
PHILIPPINES,
petitioner,
vs.
HON. JUDGE CATALINO CASTAEDA, JR. OF THE COURT OF FIRST INSTANCE OF
ILOILO; MANUEL DOCDOCIL; CIRIACO ESTRELLA; ERLINDA FACUNDO; SONIA
GONZALES; JUANITO GOMELIA; FERMIN LEONOR; ESING PES; ROLANDO PETINGLAY;
DAMIANA SOILA; LYDIA VENCER AND VICTORIA YAPSING respondents
Facts:
Petitioner filed a criminal case against private respondents for occupying the lot and erecting a
house therein. Private respondents were acquitted on the said crime for failure of the petitioner
in proving the private respondents guilt beyond reasonable doubt. Petioner herein files a motion
in the court of first instance contending that although private respondents were acquitted on the
criminal charged. Private respondent should return him the lot. The courts of first instance
dismiss the appeal. Petitioner petition in the court of appeals for review but was forwarded to the
Supreme Court because it involves the question of law, hence this petition.
Issue:
Whether or not the acquittal of the respondent in criminal case extinguish his civil liabilities.
Ruling:
The appeal is dismissed without merit. The petitioner should have filed a separate civil action
against respondent for the recovery of the lot.

39.G.R. No. L-57555 August 28, 1984

THE
PEOPLE
OF
THE
vs.
TERESA JALANDONI, accused-appellant

PHILIPPINES,

plaintiff-appellee,

Facts:
This petion was raised praying that the decision of the court of appeals be modified and to
order the respondent jalandoni to pay P1,391,780.00 accused-appellant's civil liability to
private complainant plus interest at the legal rate of 12% per annum from the time of
demand for payment until full payment. Respondent was pronounced guilty of estafa in
CFI but the decision was reversed by Court of appeals. Respondent contends that thethe
amount of the civil liability, if any, is unsettled and requires necessarily the introduction
of proof.

Issue:
Whether or not the acquittal in the criminal case of not beyond reasonable doubt extinguishes
the civil liability
Ruling:
The petion was granted and order the respondent to pay the civil liability of P 1,391,780.00 with
interest at the legal rate of 12% per annum as respondent admitted in her written statement that
BPI suffered damages.
40. G.R. No. L-50632 February 24, 1981
THE
PEOPLE
OF
THE
vs.
MARIANO ENTES, accused-appellant.

PHILIPPINES,

plaintiff-appellee,

Facts:
The plaintiff filed a case of rape against her father herein respondent.the court of first instance
convicted the respondent for death penalty and indemnify the plaintiff amounting to P12,000
pesos. Hence this automatic review of the supreme court.
Issue: whether of not criminal case carries with it the civil liability
Ruling;
The decision is affirmed in all other aspects with modification and sentence should be reclusion
perpetual not death.

41. G.R. No. L-57804 January 23, 1984

THE
PEOPLE
OF
THE
PHILIPPINES,
petitioner,
vs.
MAYOR EMILIANO CARUNCHO JR., ALFONSO CORDOVA, CESAR CORPUZ, JACINTO
GONZALES and HON. ERIBERTO ESPIRITU, in his capacity as Judge of the Municipal
Court of Pasig, respondents
Facts:
This petion for certiorari was raised against respondent for grave abuse of discretion
amounting to lack of jurisdiction. Respondent herein dismissed the case of slight
physical injuries against mayor caruncho on the reason of affidavit of desistance is
complete and in accordance with the requirements of PD 1508 submitted by Reyes, who
filed the criminal case.
Issue:

Whether or not the affidavit of desistance in a criminal case would not result to civil
liability
Ruling:
The petition is dismissed for lack of merit.

42. G.R. No. L-59919 November 26, 1986

MALAYAN
INSURANCE
CO.,
INC.,
petitioner-appellant,
vs.
THE HONORABLE COURT OF APPEALS and AURELIO LACSON, respondents-appellees.
Edgardo Elumba, Yulo, Sedonio, Alejandro and Associates for petitioner-appellant.
Filomeno B. Tan, Jr., Soberrano, Leong, Amihan, Tan, Escuerte, Parel and Associates for
private respondent-appellee.
Facts:
The record shows that petitioner entered into an insurance contract where the respondent
insured his car for one year. The car was brought by the petitioner to the Carlos Jamelo's repair
shop and was stolen by its employees. In the event thereof, the accident and the damage of the
car amounted to P21, 849.62.the accused were convicted in the criminal charged and
respondent asks for indemnification from his insurance. Petitioner herein refused to pay the
private respondent contending that the driver of the car at the time of the accident is not a duly
licensed driver. Private respondent seek relief in the court and had a favourable decision which
was affirmed by the herein respondent Court of appeals. Hence this petition for certiorari was
raised by petitioner Malayan Insurance co Inc. against the respondent court of appeals and
private respondent Lacson, in affirming the decision of the CFI in ordering the petitioner to pay
the amount of P20, 000.00, less deductible franchise, which is the maximum coverage of the
insurance policy and interest from the date of filing of the complaint, and the amount of P5,
000.00 as attorney's fees and expenses in litigation.
Issue: whether or not the insurance company covered damages in accident events arising from
a criminal case.
Ruling:
The court affirmed the decision of the Court of appeals on the ground that the conviction of the
accused entitles the respondent to recover his insurance.and the Arts. 1169, 1170 and 2209 of
the Civil Code. Thus, a debtor who is in delay (default) is liable for damages (Art. 1170)
generally from extrajudicial or judicial demand (Art. 1169) in the form of interest.

43. [G.R. No. 138210. June 06, 2002]

SPOUSES SINFRONIO PUERTO and ESPERANZA PUERTO, petitioners, vs. HON. COURT
OF APPEALS, HON. BR. 83 OF THE REGIONAL TRIAL COURT OF QUEZON CITY and
SPS. INOCENCIO and ELEUTERIA CORTES, respondents.
Facts:
Petioner herein brought a land from Mrs. Luna but did not have it titled before they executed a
contract of mortgaged to the respondents where it did not contain any stipulation of interest
however it sates that if petitioner fails to pay the debt.the petioner would foreclose the said
house and lot. Petitioner herein failed to pay the debt,hence,the house and lot was owned by
the respondent.petioner were given few more days to look for a house but petioner refuses to
leave the said house and responden t filed a ejectment case against them. Petitioner entered
into an agreement with the respondent to rent the house for the amount of P3000 pesos but
only through verbal agreement and later made to a contract of lessor and lessee.The petioner
was not able to pay the succeeding payment because of the usurious demands of private
respondents.petioner filed a case of declaration of nullity of the Deed of Real Estate Mortgage.
the case was dismissed by the CFI. On appeal, the decision was reversed hence this petition of
certiorari to reverse the decision of the Court of Appeals.
Issue: whether or not the usurious contract entered by the petitioner and respondent is valid or
void.
Ruling:
The petition is granted and order the petitioner to pay the 150.000 plus 12% interest to the
respondent under section 2 of the Usury Law,the maximum rate of interest on a loan or
forbearance of money secured by a mortgage upon real estate the title to which is duly
registered and the the cancellation of the land title by the respondents and returning it to the
petitioner.
44. G.R. No. L-60151 June 24, 1983
SALVADOR L. BUDLONG, in his capacity as Acting Third Assistant City Fiscal, City of
Tagbilaran, petitioner, vs.HONORABLE AQUILES T. APALISOK, in his capacity as Acting City
Judge, City Court, Branch II, City of Tagbilaran, and CAMILIO PUYO Y GALAGAR,
respondents.
Facts:
The petitioner herein was charged with a criminal case and pleaded guilty. the judge rendered
the decision in convicting the petitioner.the petitioner file a motion to to hear and prove his civil
liabilities.the respondent judge dismissed the motion.hence, this petition was raised.
Issue: whether or not the civil case arising from criminal case can be heard separately
Ruling:s

The petition is granted and ordering the respondent judge to try and hear the civil case of the
petitioner. When a criminal action is instituted, the civil action for the civil liability arising from the
offense is impliedly instituted with the criminal action. unless the offended party expressly
waives the civil action or reserves his right to institute it separately (Art. 100, Revised Penal
Code and sec. 1, Rule 111, Rules of Court).
45. [G.R. No. 139885. January 13, 2003]
BANGKO SENTRAL NG PILIPINAS, petitioner, vs. JESUS G. SANTAMARIA, doing business
under the name and style of J. SANTAMARIA & ASSOCIATES, respondent.

No.46
G.R No.L-26970 March 19,1984
Buayan Cattle Co.,Inc. vs Quintillian
Facts
Petitioner was a prior lessee in the actual, peaceful and continued possession at least since
1965 of the disputed area until the private respondent de las Marias, on the strength of a
pasture lease granted only in 1964, unilaterally removed the petitioners fences and
immediately established his own boundary fence 580 hectares into the petitioners pasture land.
The Secretary of Agriculture suspend the effectivity of private respondent pasture lease
agreement and there has been the issuance of preliminary injunction against petitioner. Finally,
the relocation survey caused by the private respondent to determine the exact location of
pasture land allegedly awarded to him is questioned as irregular for having been conducted by a
forest guard, not competent to do so as well as the validity of the said survey itself is also
contested as not having been made in accordance with the rules of Bureau of Forestry.
Issue: Whether or not private respondent acquire lawful possession of the area?
Ruling
Private respondent admits the presence of an actual possessor under a lease right in the
disputed area prior to his own entry and occupation thereof. Assuming that private respondents
lease of right is equally valid as that of the present possessor, here in, petitioner ,the formers
course of action should not have been to destroy the petitioners fence and enter disputed area
and set-up his own fence there in. Private respondent should seek the aid of a competent court
and not take the law into his own hands. Usurpation is not such as a method of acquiring
possession Civil Code provides:
Art.536 In no case may possession be acquired through force or intimidation as long as there is
a possessor who objects there to. He who believes that he has an action or right to deprive

another of the holding of a thing must invoke the aid of competent court, if the holder should
refuse to deliver the thing.
No.47
G.R No. L-29838 March 18,1983
Bobis and Guadalupe vs The provincial sheriff of Camarines Norte
Facts
The Petitioners appealed from the judgment of CFI of Cam.Norte when it dismissed the
complaint for annulment of an execution sale the subject of which is a parcel of land who has
been sold to petitioners by spouses Camino and Eco after a controversy involving one Ortega
(who file a complaint against petitioners and spouses) claiming recovery of the portion of land
and the value of improvements there in. Parties executed a compromise agreement and such
was submitted to the court, the souses partially paid the amount for the improvements as a
result, a writ of execution was issued commanding respondent sheriff and consequently levied
upon the land in question at an execution sale to one Rivera.
Issue: Whether or not the sale to Petitioners in fraud of creditors?
Ruling
No. The right of Rivera over the land is derived from a void execution sale. The rule, however, is
not presumed. As fraud is criminal in nature, it must be proved by clear preponderance of
evidence. In order that a contract may be rescinded as in fraud of creditors, it is essential that it
be shown that both contacting parties have acted maliciously and with fraud and for the
purpose of prejudicing said creditors, and that the latter are deprived by the transaction of all
means by which they may effect collection of their claims. All these must concur in a given case
presence of only one of them is not enough.
The writ of execution is null and void and of no legal effect to the petitioners. Annulment of the
writ of execution carries with it annulment of sale made by the sheriff pursuant to said writ as
well as the order of the court approving the sale. In Yboleon vs. Sison, Court ruled that a judge
or court, which sets aside a judgment rendered upon consent of the parties and based on a
compromise entered in to by them, which is converted into such judgment, cannot amend or set
it aside without the consent of said parties, or without first having declared in an incidental
preliminary hearing that such compromise is vitiated by any act of the ground for nullity
enumerated in Art.2038 of the Civil Code. Since modification of judgment was made unilaterally
in the writ of execution without any preliminary hearing, it was unjustified.

No.48

G.R No.L-58004 May 30,1983

PLDT vs NLRC
Facts
The petitioner questioned the decision of Labor Arbiter together with public respondent NLRC
when it dismissed the clearance to dismiss private respondents who are employees of petitioner
and ordering their reinstatement, without loss of seniority rights as well as other privileges and
back wages. Prior to such, private respondents were alleged to be involved in telehygeinic
racket that cause inconvenience to telephone users, they have been arrested and detained by
military authorities, coming upon the knowledge of petitioner he placed employees in preventive
suspension, then after private respondents reported for work but was refused by petitioner and
latter filed application for clearance to dismiss private respondents from employment while the
latter filed their own complaint for illegal dismissal.
Issue: Whether or not the denial of clearance to dismiss and the entitlement to back wages of
private respondents, justified?
Ruling
Yes. The petitioner not having proved nor substantiated any ground to justify its alleged loss of
confidence in the employees so as to authorize their dismissal based on the ground that we
have to recognize the Constitutional right of the employees to security of tenure. They not
having given just and valid causes to warrant termination of their employment. Art.280 New
Labor Code as amended, their reinstatement entitles them to payment of back wages.
Considering, however that private respondent employees have been laid off for over four years
during which period they were not prevented from deriving income from some other gainful
activity, the court deems it fair that their back wages should be limited to two years without
deduction.
No.49
G.R No.L-66724 September 30,1984
Bagumbayan Corp. vs IAC and Sena
Facts
The petitioner corporation is the owner of the hotel where in the respondent with her family
come into for an evening show, a waiter was serving the private respondents table and the tray
containing the drinks was overturned and fell on her, she drenched, felt chill, and splinters from
the broken glasses allegedly destroyed her dress together with her handbag and shoes which
cost P1000. She had to remove her dress and under wear on the ladies room, was not given
any towel to cover herself. She testified claiming moral damages of 100,000 for herself and her
husband due to embarrassment and that the management did not even apologize that night.
Also, exemplary damages of the same amount to teach management a lesson.

Issue: Whether or not private respondent be entitled to moral as well as exemplary damages?
Ruling
The instant case is not specifically mentioned in Art.2219 which refers to quai-delicts causing
physical injuries. Generally, there can be no recovery of moral damages if case is not
mentioned in art.2219 and 2220. Embarassment to which private respondent was exposed by
the incident is not mental anguish contemplated in Art.2217 for which moral damages can be
recovered. While in the case award for moral damages has some basis the grant of moral and
exemplary damages is devoid of legal justification because it is nor predicated upon any of the
cases enumerated in the Civil Code Art.2217and 2219. Petitioner ordered to pay private
respondent P5,000 to cover her actual damages, litigation expenses and attorneys fees.
No.50
G.R No.155076 February 27,2006
Laurel vs Abrogar
Facts
The petitioner was one of the officers of a Company who offers and sells phone cards for
international long distance calls such was allege by private respondent PLDT as one of the
alternative calling patterns that constitute network fraud and violate its network integrity known
as International Simple Resale method of routing and completing international long distance
calls using International Private Lease lines. PLDT filed a complaint against petitioners for
network fraud, also contended that movant unlawfully took personal property belonging to it.
Here in petitioner filed a motion to quash the information but was denied.
Issue: Whether or not international telephone calls can be regarded personal property?
Ruling
Respondent PLDT does not acquire possession, much less, ownership of the voices of
telephone calls or of the electronic voice signals or current emanating from said calls the
human voice and the electronic voice signals or current caused thereby are intangible and not
susceptible of possession, occupation or appropriation by respondent PLDT or even the
petitioner for that matter. The petitioner is not charged, under the amended information for theft
of telecommunication or telephone services offered by PLDT. Even if he is, the term personal
property under art 308 of RPC cannot interpreted beyond its scams as to include
telecommunication or telephone services or computer services for that matter.
According to Cuello Callon, in the context of Penal Code, only those movable properties which
can be taken and carried from the place they are found are proper subject of theft. Intangible
properties such as rights and ideas are not subject of theft because the same cannot be taken
from the place it is found occupied or appropriated. It should be distinguished from the right or
interests to whom they relate. The person is entitled to exercise it, is not subject of theft or
larceny. Such rights or interests are intangible and cannot be taken by another.

No.51
CA-GR 56874-R July 8,1981
Ambaan vs Bellosillo,et.al
Facts
There was a public utility jeep driven by a reckless driver as a result of which passengers
suffered injuries.
Issue: Whether or not the passengers can sue the owner-operator of the vehicle?
Ruling
Yes. The petitioner passenger can sue the owner-operator of the jeep without necessity of first
bringing a criminal case against the said driver. The governing law in such case is the Civil
Code which requires common carriers to carry their passengers safely to their destinations with
the exercise of extraordinary diligence. Considering the negligence of the driver it is clear that
under the master and servant rule, the liability of the owner-operator is not subsidiary but direct
and immediate. Indeed, the negligence of the servant in contractual obligations is the
negligence of the master. The master and the servant rule is also known as the doctrine of
respondeat superior .Under this rule, the master, to escape liability, cannot put up the defense
of a good father in the selection and supervision of employees (except to mitigate said liability, if
this defense duly proven).
No.52
CA-GR 21947-CR July 21,1981
People vs Alejandro O.Tan Jr. (Cannot be found)
No.53
G.R No. 148582 January 16,2002
Far East Bank and Trust Co. vs Querimit
Facts
The petitioner bank maintains their stand in denying here in petitioners withdrawal of deposit
telling the latter that her husband withdrawn the money. Respondent here in through counsel
sent a demand letter and a request for updating and payment of the certificate of deposit,
including interest there in, with the refusal of petitioner to grant such demand here in respondent
filed a complaint.
Issue: Whether or not petitioner bank be liable for denying withdrawal of deposit?
Ruling

Yes. Petitioner failed to prove payment of the subject certificate of deposit issued to the
respondent and therefore, remains liable for the value of the dollar deposits indicated there on
with accrued interest. Responsibility arising from negligence in the performance of every kind of
obligation is demandable. Petitioner failed to exercise that degree of diligence required by the
nature of its business. Because the business of banks is impressed with public interest, the
degree of diligence required of bank is more than that of a good father of a family or of an
ordinary business firm. The fiduciary nature of their relationship with their depositors requires
them to treat the accounts of their client with the highest degree of care.

No.54
G.R No.L-47851 October 3, 1986
Juan F.Nakpil and Sons et.al vs CA et.al
Facts
The petitioner here in together with a Construction company entered into a contract with private
respondent Philippine bar association for the construction of the latters office building. Two
years later after the completion of the building, an unusually strong earthquake hit Manila, the
building sustained major damage.PBA commences an action for recovery of damages arising
from the partial collapse of the building, and allege that such as accused by the defect in the
construction, the failure of the contractor to follow the plans and specifications and violations by
petitioner of the terms of contract the latter claimed that it was an act of God that cause the
failure of the building which should exempt them from liability.
Issue: Whether or not Act of God-an unusually strong earthquake which caused the failure of
the building exempt petitioner from liability?
Ruling
No. To exempt from liability under Art.1174 of the Civil code, for a breach of an obligation due to
an act of God following must concur
(a) the cause of the breach of the obligation must be independent of the will of the debtor;
(b)the event must be either unforeseeable or unavoidable;
(c) the event must be such as to render it impossible for the debtor to fulfill his obligation in a
normal manner, and
(d) the debtor must be free from any participation in or aggravation of injury to the creditor.
Thus, if the happening of a fortuitous event or an act of God, there concurs a corresponding
fraud, negligence, delay or violation or contravention in any manner of the tenor of the obligation
as provided in Art.110 of the Civil Code, which results in loss or damage, the obligor cannot
escape liability. As correctly assessed by both courts, the defects in the construction and in the

plans and specification were proximate causes that rendered the PBA building unable to
withstand the earthquake. For this reason they cannot claim exemption from liability.
No.55
G.R No.L-56487 October 21, 1991
Gatchalian vs Delim
Facts:
The petitioner was one of the injured passengers who sustained physical injuries from a minibus mishap, before such a snapping sound was heard at one part of the bus and shortly it
bumped a cement flower pot on the side of the road and turned turtle and fell into a ditch.
Passengers while confined in the hospital was visited by the wife of respondent operator who
paid for their medical expenses and made to sign the petitioner together with others a joint
affidavit (waiver of the right to institute action),not withstanding such, petitioner instituted an
action against respondent for damages, respondent contended that such was caused by the
fortuitous event and that they did exercise the necessary diligence.
Issue: Whether or not private respondent exercise the necessary diligence?
Ruling
No. The obvious confined failure of respondent to look after the road worthiness and safety of
the bus, coupled with the drivers refusal or neglect to stop the mini-bus after he had heard a
snapping sound and the cry of alarm from one of the passengers constituted wanton disregard
of the physical safety of passengers and hence gross negligence on part of respondent and his
driver.
In cases of death or injuries to passengers, a statutory presumption arises that the common
carrier was at fault or had acted negligently unless it proves that it observed extraordinary
diligence as prescribed in Art 1733 and 1755 of the Civil Code.
What is involved here is the liability of a common carrier for injuries sustained by passengers in
respect of whose safety a common carrier must exercise extraordinary diligence, we, must
construe any such purported waiver most strictly against the common carrier. For a waiver to be
valid it must not be contrary to law, morals public policy or good custom as provided by Art.6
Civil Code.

No.56
G.R no.159617 August 8,2007
Sicam vs Jorge

Facts
The petitioner was the owner of a Pawnshop where respondent pawned several pieces of
jewelry to secure a loan. After which, two men entered the pawnshop and took away whatever
cash and jewelry were found inside the pawnshop vault. Incident was entered into the police
blotters. Petitioner through a letter informed respondent of the incident. Respondent requested
petitioner to prepare the pawned jewelry for withdrawal but the latter failed to do as such
respondent filed a complaint for indemnification of the loss of pawned jewelry and damages.
Petitioner interposed the defense of Fortuitous event and negates negligence.
Issue: Whether or not the loss of the thing pawned exempt petitioner from liability?
Ruling
No. By the very evidence, petitioner is guilty of concurrent or contributing negligence as
provided in Art.1170 of the Civil Code:
Those who in the performance of their obligation are guilty of fraud, negligence or delay, and
those who in any manner contravene the tenor there of, are liable for damages. Also, Art.2123
of the Civil Code provides that with regard to pawnshops and other establishments which are
engaged in making loans secured by pledges, the special laws and regulations concerning them
shall be observed and subsidiary, the provision on pledge ,mortgage and antichresis.
The provision on pledge particularly Art.2099 of the Civil Code provides that the creditor shall
take care of the thing pledge with the diligence of a good father of a family this means that
petitioner must take care of the pawns the way a prudent person would as to his own personal
property.
57. Liam Law vs. Olympic Sawmill Co., G.R. L-30771, 28 May 1984
Facts: This action is an appeal by Olympic Sawmill, Co. which was raised by the CA to the
Supreme Court being an issue of law. Hence, the petitioner is Olympic Sawmill, Co.
The petitioner filed this appeal contesting the trial court decision obliging them to pay the
principal amount of P10,000.00 plus P6,000.00 as liquidated damages for attorney's fees, legal
interest and other cost incident to the non-payment of the principal. Said non-payment
constituted of the original loan of the principal without interest which was left unpaid even after
an extension of 3 months, and the subsequent extension which included the interest which was
also left unpaid. The petitioner then argued that the additional P6,000.00 is an usurious interest
and such has been deemed admitted by Liam Law "as it was not denied specifically under oath"
as provided by Section 9 of the Usury Law Act, as follows:
SEC. 9. The person or corporation sued shall file its answer in writing under oath to any
complaint brought or filed against said person o corporation before a competent court to recover
the money or other personal or real property, seeds or agricultural products, charged or
received in violation of the provisions of this Act. The lack of taking an oath to an answer to a
complaint will mean the admission of the facts contained in the latter.

Issue: Whether or not a claim of usurious interest is deemed admitted by the Liam Law when
he fails to deny such claim of usury specifically and under oath
Finding: The Court ruled that the provision does not apply as the said provision contemplates a
complaint for the recovery of usurious interest paid, not the evasion of payment of interest by
claim of usury. Also, under Article 1354 of the Civil Code, it is presumed that the agreement
exists and is lawful, unless the debtor proves the contrary. No evidence was presented to
substantiate the claim. Moreover, usury is currently legally non-existent and any interest may be
charged as agreed upon by both parties.

58. Serrano vs Central Bank, Overseas Bank of Manila, et al, G.R. No. L-30511, 14
February 1980
Facts: This petition for mandamus and prohibition seeks to establish joint and solidary liability
of P350,000, with interest, against the respondent Central Bank for the alleged failure to strictly
supervise Overseas Bank of Manila (OBM) which resulted to its inability to return the time
deposits made by and assigned to the petitioner. He contends that since the assets of OBM
were acquired by the use of depositors' money, these must be held in a trust fund favoring the
depositors even when the said assets were already used as collaterals to Central Bank for
OBMs emergency loans and overdrafts. The respondent Central Bank argues that it could not
have watched over every move of OBM, the latter operating on a limited degree in view of its
chronic insolvency before it was ultimately dissolved and liquidated by the Central Bank. It also
averred that it had no knowledge of the assets used as collaterals being sourced from
depositors and that it was entitled to claim the said assets.
Issue: Whether or not there should be a constructive trust in favor of the depositors instead of
the Central Bank for the collaterals given by OBM to the Central Bank for OBM's overdrafts and
loans
Finding: No, the petitioner is not entitled to the constructive trust as bank deposits are in the
nature of irregular deposits. They are really loans because they earn interest. All kinds of bank
deposits, whether fixed, savings, or current are to be treated as loans and are to be covered by
the law on loans. Current and savings deposits are loans to a bank because it can use the
same. The petitioner here in making time deposits that earn interests with respondent Overseas
Bank of Manila was in reality a creditor of the respondent Bank and not a depositor. The
respondent Bank was in turn a debtor of petitioner. Failure of the respondent Bank to honor the
time deposit is failure to pay its obligation as a debtor and not a breach of trust arising from a
depositary's failure to return the subject matter of the deposit.

59. Municipality of San Miguel vs Hon. Oscar Fernandez, G.R. No. L-61744, 26 June 1984
Facts: In Civil Case No. 604-B, the lower court held the petitioner municipality liable to Mrs.
Imperio for rentals paid by the occupants of subdivision lots donated by the deceased Mr.

Imperio in favor of the municipality, and the partial revocation of the Deed of Donation as well as
the restoration of ownership and possession over the said lots in favor of Mrs. Imperio. The
respondent judge then issued a writ of execution to the municipality after the lower court's
decision became final for its failure to file an appeal on time. Herein petitioner filed this review
for certiorari arguing that property or funds belonging to the municipality are all public funds
exempt from execution and cannot be subject to levy.
Issue: Whether or not the funds of the petitioner municipality, in the hands of the provincial and
municipal treasurers of Bulacan and San Miguel, respectively, are public funds exempt from
execution for the satisfaction of the money judgement in Civil Case No. 604-B
Finding: It is the settled doctrine of the law that not only the public property but also the taxes
and public revenues of such corporations cannot be seized under execution against them, either
in the treasury or when in transit to it. Judgments rendered for taxes, and the proceeds of such
judgments in the hands of officers of the law, are not subject to execution unless so declared by
statute. These are held in trust for the people, intended and used for the accomplishment of the
purposes for which municipal corporations are created, and that to subject said properties and
public funds to execution would materially impede, defeat or destroy the said purpose. Besides,
there must be, pursuant to Section 2(a) of Presidential Decree No. 477, a corresponding
appropriation in the form of an ordinance duly passed by the Sangguniang Bayan before any
money of the municipality may be paid out. There was no showing of such ordinance in the
present case.

60. Special Services Corporation vs Centro La Paz, G.R. No. L-44100, 28 April 1983
Facts: In 1972, a judgment was rendered in favor of petitioner Special Services Corporation by
CFI-Manila against one Alejandro Estudillo in an action for Replevin with Sum of Money. A writ
of execution was thereafter issued but remained unsatisfied. So by virtue of an alias writ of
execution, the Sheriff of Manila levied real properties of which Alejandro was one of the
registered owners. Alejandro then moved to dissolve/cancel the notice of levy before the
scheduled auction, alleging that he and the other owners indicated on the title that the
properties merely held in trust the properties and improvements therein in favor of Centro La
Paz. Centro also submitted a third party claim averring exclusive ownership of the properties.
The lower court then held that although the trust was unregistered, Centro La Paz is indeed the
true owner of the property in dispute, and that the persons registered as owners - including
Alejandro - are merely trustees of Centro. Thus, the properties cannot be levied upon.
Issues:
Whether or not the fact of registration of ownership by the private individuals bar
evidence that the property is held in trust in favor of Centro La Paz
Finding: No, it does not bar evidence that sufficiently establishes that the registered owners of
the parcels of land, all of whom are members of Centro La Paz, hold the properties in trust for
the latter by virtue of the indubitable documents executed even before the institution of suit. In
the same manner that real property, registered solely in the name of husband, can be proven to

be conjugal property with his wife, the fact of registration in the name of Alejandro and others
does not bar evidence to show that the related owners hold the properties in trust for Centro La
Paz. The petitioner also could not be deemed a purchaser in good faith when it knew of Centro
La Paz' claim, particularly when the latter had filed a third party claim with the Sheriff before the
scheduled auction sale, which knowledge was equivalent to registration of the trust.

61. Eastern Shipping Lines, Inc. vs South Sea Exports, Inc et al., G.R. No. 58883-R, 21
July 1981
(cannot find)

62. Co Bun Chun vs Overseas Bank of Manila, G.R. No. L-27342, 24 May 1984
Facts: Petitioner placed with the Overseas Bank of Manila (OBM) a time deposit of P66,000 for
one year with a 4.5% interest per annum. Four days later, he assigned to the bank the said time
deposit as security for the 6-month overdraft accounts of Henry Shoe Supply and Northwest
Auto Supply amounting to P300,000. It was a condition of the assignment that the time deposit
could not be withdrawn unless the overdraft line, interests due thereon and expenses incurred
had been fully paid. The overdraft accounts were then liquidated only after almost a year after
they became due, during which the bank incurred 5% of the accounts or P11,444.06 as
expense for the collection of the amounts due. Hence, the respondent bank deducted from the
time deposit the said collection expense. The petitioner filed the instant action to recover the
amount contending that the bank had no right to charge attorney's fees and expenses in the
extrajudicial collection from the time deposit, but the instant action was dismissed.
Issue: Whether or not the petitioner is correct in his contention that making him liable for the
costs of extrajudicial collection would make his obligation as guarantor more onerous than the
principal debtor and must only be liable for interest, as given in Arts. 2054 and 2209 of the Civil
Code
Finding: No, he is incorrect. The petitioner is bound by the terms of the deed assigning his time
deposit to the bank. He was not a mere guarantor of the overdraft account, as the assignment
specifically bound him to pay expenses incurred for the collection of the accounts. The expense
charged was different from the interest of the overdraft accounts and was a consequence of the
default of the petitioner's companies. He may, however, seek reimbursement from the
companies for what he had to pay the bank.

63. Regales vs IAC (L-65022 Jan. 31, 1984)

(cannot find)

64. San Miguel, et al. vs Elbinias, et al., G.R. No. L-48210, 31 January 1984)
Facts: The petitioner and the estate of the deceased Romeo was proceeded against by private
respondent Carmen for recovery of a 1,300 square meter unregistered land valued at P50,000,
which was then awarded to the later. Private Carmen subsequently asked for a writ of execution
which was issued together with an order of demolition of the properties of the petitioners in the
said land. But before they could be demolished, petitioners Rafols and San Miguel filed third
party claims with the Sheriff, with the latter approving only that of San Miguel. Private
respondent then posted the P25,000 bond to push with the demolition. The petitioners then
filed for the issuance of a writ of preliminary injunction to stop the demolition, but was asked by
the respondent judge to also post the P50,000 bond. The petitioners appealed the bond be
reduced alleging that the bond required must only be for the rental of the land and not for the
value of the property; the appeal was denied by the respondent judge.
Issue: Whether or not the respondent judge acted with grave abuse of discretion in requiring
petitioners to post a bond for the issuance of a writ of preliminary injunction at P50,000 and
subsequently refusing to reduce it
Ruling: No. The amount of the bond to be posted is discretionary upon the trial court and
should not be interfered with except in case of grave abuse of such discretion. Hence, the trial
court may fix any amount for the bond so long as it is not done arbitrarily, capriciously, or
without basis. In the case at bar, the amount of the bond required by respondent Judge is
reasonable and justifiable under the circumstances. Firstly, in fixing the amount of the bond at
P50,000 respondent Judge took into consideration the market value of the property which is
admittedly P50,000 and the fact that when the third-party claim of the petitioner was given
cognizance by the court, private respondent Carmen was required to post a bond of P25,000 in
order to enforce the writ of execution and the order of demolition be implemented. Secondly, the
damages which private respondents may suffer by virtue of the issuance of the writ of
preliminary injunction are not limited to the rent due for the use and enjoyment of the property
occupied by petitioners but include those that may arise from their inability to enjoy the
ownership and possession of the property pursuant to the final and executory decision in favor
of private respondents.

65. Agapito Gutierrez vs Capital Insurance and Surety Corp., G.R. No. L-26827, 29 June
1984
Facts: The petitioner had his jeepney insured by the respondent for one year against
passenger and third-party liability. The insurance policy included that the authorized driver must
be a holder of a valid and subsisting professional driver's license. On May 1962, the jeepney
figured in an accident wherein one of the passengers fell off and died. The driver of the jeepney,
although duly licensed until 1963, did not have his license with him during the accident. What he
had was a carbon copy of a traffic violation report (TVR) issued on February 1962 which
required him to report to the traffic court on March 1962. The TVR served as a temporary
operator's permit for 15 days after issuance; thus, the driver was holding an expired permit. The

petitioner paid the widow of the deceased but was refused reimbursement by the respondent.
The lower court and CFI held that the driver was an authorized driver as his TVR was
coextensive with the two-year term of his confiscated license, hence this instant case.
Issue: Whether or not an insurance covers a jeepney whose driver's traffic violation report or
temporary operator's permit had already expired
Ruling: No. Parties are bound by the stipulations in the policy. As the insurance policy plainly
fixed the meaning of "authorized driver" . That stipulation cannot be disregarded or rendered
meaningless. It is binding on the insured. A driver with an expired TVR or expired temporary
operator's permit is not considered an authorized driver within the meaning of the policy, and
does not make the petitioner entitled to recovery.

66. Integrated Construction vs Hon. Relova, et al., G.R. No. 41117, 29 December 1986
Facts: The petitioners sued the respondent Metropolitan Waterworks and Sewerage System
(MWSS) for breach of contract which the Arbitration Board, through the respondent judge,
awarded to the petitioners. The decision ordered MWSS to pay the petitioners P15,518,383.61 less P2,329,433.41, to be set aside as a trust fund in favor of the creditors of the joint venture in
connection with the project. Subsequently, the petitioners agreed to give MWSS some discounts
provided that MWSS pay them within fifteen days of this agreement or up to October 17, 1972.
They later agreed to extend the period of payment of the discounted price to October 31.
MWSS, however, paid the discounted price only on December 22. Three years thereafter, after
the release of the trust fund to the satisfy their creditor's claims, the petitioners filed a motion for
execution for the balance due. Respondent judge denied the motion on the ground that the
parties had novated the award by their subsequent agreement to the discounted price.
Issues:
Whether or not the respondent judge erred in holding that the original award was
novated by the subsequent agreement granting the discounted rate if paid on or before October
31, and barred the collection of the balance of the original judgment-award
Finding: No. Although the tenor of the subsequent agreement in a sense novated the judgment
award there being a shortening of the period of payment, the suspensive and conditional nature
of the agreement is expressly acknowledged and stipulated. The failure of MWSS to pay within
the stipulated period removed the very cause and reason for the agreement, therefore remitting
to the petitioners their original rights under the judgment award. The petitioners also never
acknowledged full payment and refused MWSS' request for a conforme or quitclaim; thus, they
cannot be held in estoppel for now collecting the balance of the original judgment-award.

67. Luzon Surety Corp., Inc. vs Quebrar, et al., G.R. No. L-40617, 31 January 1984
Facts: The petitioner issued two administrator's bonds in the amount of P15,000 each to
respondent Quebrar as administrator of the testate estates of Chinsuy and Lipa in 1954. In

consideration of the suretyship, wherein the petitioner was bound jointly and severally with the
respondents, the latter executed two indemnity agreements to each pay the petitioner P300 in
advance as premium thereof for every 12 months or fraction thereof or while any renewal or
substitution thereof is in effect. They also agreed to indemnify the petitioner against any and all
damages, losses, costs, stamps, etc., including 15% of the account for attorney's fees. The
respondents paid the advance for the first year but in 1957 amended the project and partition of
accounts which was approved by the CFI. Petitioner then demanded the payment of the
premiums and stamps but in 1962, the respondents countered with a motion for cancellation of
executor's bonds as the heirs of the estates have already received their respective shares; this
was approved by the CFI. By October 1962, the petitioner's demand amounted to P4,872 from
the last payment of the premium and stamps made by the respondents. The lower court then
allowed the recovery of the said amount ruling that even if the respondents did not expressly
seek the renewal of the said bonds, the same were in force and effect until their cancellation in
1962.
Issue: Whether or not the administrator's bonds were in force and effect from and after the year
that they were filed and approved by the court up to their cancellation in 1962
Ruling: Yes. The proper determination of the liability of the surety and of the principal on the
bond must depend primarily upon the language of the bond itself. Having in mind the purpose
and intent of the law, the surety is then liable under the administrator's bond, for as long as the
administrator has duties to do as such administrator. Since the liability of the sureties is coextensive with that of the administrator and embraces the performance of every duty he is called
upon to perform in the course of administration, it follows that the administrator is still duty
bound to respect the indemnity agreements entered into by him. The respondent administrator
did not cease his function after the approval of the amendment of the project and partition of
accounts, for administration is for the purpose of liquidation of the estate and distribution of the
residue among the heirs and legatees. And liquidation means the determination of all the assets
of the estate and payment of all the debts and expenses. It was found that even after in 1957,
there were still debts and expenses to be paid; thus, the bond is deemed as in effect.
68. Sps. Mariano Z. Velarde and Avelina D. Velarde vs CA (GR 108346 July 11, 2001)
FACTS: The parties herein entered into a contract of sale over a parcel of land owned by the
private respondents. A Deed of Sale with Assumption of Mortgage, with a balance of P1.8
million, was then executed by the private respondents in favor of the petitioners. Pursuant to
their agreements, the petitioners paid to the bank (BPI) the monthly mortgage payments for
three (3) months; until they were advised that their Application for Assumption of Mortgage was
denied. This prompted the plaintiffs to stop any further payment. Private respondent informed
the petitioners that such non-payment constitutes the non-fulfillment of their obligations.
Petitioners, through counsel, responded that they are willing to pay in cash the balance subject
to several conditions. Private respondents then sent a notarial notice of cancellation/rescission
of the Deed of Sale. Petitioners filed a complaint opposing the rescission, which was dismissed,
but later reversed in their MR. The Court of Appeals reinstated the decision to dismiss.
ISSUE: Whether or not there is a substantial breach of contract that would entitle its rescission.

HELD: Yes. Article 1191 of the New Civil Code applies. The breach committed did not merely
consist of a slight delay in payment or an irregularity; such breach would not normally defeat the
intention of the parties to the contract. Here, petitioners not only failed to pay the P1.8 million
balance, but they also imposed upon private respondents new obligations as preconditions to
the performance of their own obligation. In effect, the qualified offer to pay was a repudiation of
an existing obligation, which was legally due and demandable under the contract of sale.
Hence, private respondents were left with the legal option of seeking rescission to protect their
own interest. However, since the rescission is based on Article 1191, mutual restitution is
required to bring back the parties to their original situation prior to the inception of the contract;
so as to prevent the unjust enrichment of one party at the expense of the other.
69. Ayson-Simon vs Adamos and Feria (L-39378 Aug. 28, 1984)
FACTS: Adamos and Feria, defendants herein, purchased two lots from Juan Porciuncula.
However, Porciunculas successors-in-interest sought for the cancellation of the sale, which was
subsequently granted by the court. While such case was pending, the defendants sold to Ayson
Simon the lots in question. Due to the failure of the former to deliver the said lots, plaintiffappellee filed a civil case for specific performance. The court ruled in her favor, but due to the
original sale of the lots to the defendants-appellants being null and void, there is impossibility
that they can comply with their commitment to plaintiff. The latter then sought the rescission of
the contract plus damages.
ISSUE: Whether or not petitioner can choose to rescind the contract, even after she had chosen
the specific performance thereof.
HELD: Yes. The rule that the injured party can only choose between fulfillment and rescission of
the obligation, and cannot have both, applies when the obligation is possible of fulfillment. If, as
in this case, the fulfillment has become impossible, Article 1191 allows the injured party to seek
rescission even after he has chosen fulfillment.

70. DMRC Enterprise vs Este Del Sol Mountain Reserve (GR 57936 Sept. 26, 1984)
FACTS: Petitioner leased a number of heavy equipment to respondent; with the further
condition that 30% of the payments due to the petitioner is to be invested in the purchase of
shares of stock of the defendant corporation. As a result of the agreement, petitioner proceeded
to perform what was incumbent upon it; however, despite repeated demands, the respondent
refused to pay its outstanding obligations to the former. Thus, petitioner filed a complaint with
the CFI, but was dismissed for supposedly being beyond the jurisdiction of the court, and within
that of the SEC. Hence, this petition.
ISSUE: Whether or not the regular courts have jurisdiction over the action for collection of
money representing unpaid obligations filed by the petitioner, rather than SEC.
HELD: Yes. The expanded jurisdiction of the Securities and Exchange Commission under PD
902-A extends only and exclusively to intra-corporate matters, which is not present in this case.
Jurisdiction over all other claims remains with the regular courts. Petitioner now seeks to

enforce the contract seeking payment for the lease of heavy equipments under Article 1657 (1)
of the Civil Code, which obliges the lessee to pay the price of the lease according to terms
stipulated. The fact that the case involves shares of stock to be used as payment for lease
rentals does not convert it into an intra-corporate controversy.

71. Central Bank vs CA and Sulpicio M. Tolentino (GR 45710 Oct. 3, 1985)
FACTS: Island Savings Bank granted an P80, 000.00 loan, secured by a mortgage, to private
respondent. However, only a mere P17,000.00 partial release was actually received by the
respondent, the rest withheld due to lack of funds and liquidity problems. Respondent signed a
promissory note to pay the same within 3 years, but failed to do so. In view of such, the bank
attempted to foreclose the real estate mortgage. An action for injunction, specific performance
or rescission and damages was filed by respondent, which was dismissed. It was likewise
dismissed on appeal in CA, but with a modified decision, that the bank can neither foreclose the
real estate mortgage nor collect the P17,000.00 loan.
ISSUE: Whether or not respondents action for specific performance prosper.
HELD: No. Private respondent, under Article 1191 of the Civil Code, may choose between
specific performance or rescission with damages in either case. Since Island Savings Bank is
now prohibited from doing further business by Monetary Board Resolution No. 967, making
specific performance impossible, rescission is the only alternative remedy left. Since both
parties were in default in the performance of their respective reciprocal obligations, they are
both liable for damages. Article 1192 of the Civil Code provides that in case both parties have
committed a breach of their reciprocal obligations, the liability of the first infractor shall be
equitably tempered by the courts. The liability of Island Savings Bank for damages in not
furnishing the entire loan is offset by the liability of Sulpicio M. Tolentino for damages, in the
form of penalties and surcharges, for not paying his overdue P17,000.00 debt.

72. Ang et. al vs CA and Lee Chuy Realty Corp. (GR 80058 Feb. 13, 1989)
FACTS: Petitioners, owners of 3 parcels of land, entered into a contract of sale of said
properties with private respondent, at the agreed total price of P1,600,000.00; the latter paying
P50,000.00 as down payment. However, due to petitioners failure to comply with their agreed
undertaking to clear obstructions on the subject lands, private respondent demanded the refund
of the down payment, which the former failed to do. Private respondent then filed a complaint for
the collection of a sum of money with damages. The trial court ruled in favor of petitioners, while
the CA reversed such decision.
ISSUE: Whether or not the petitioners breached the agreement so as to warrant its rescission.
HELD: Yes. The Court held that it is the petitioners refusal to proceed with the sale, unless
private respondent agreed to pay the higher price of P2,340,000.00, which constitutes the

serious breach of the agreement. Thus the private respondent had the right to rescind the
agreement. Moreover, it appears petitioners had already sold the subject properties to Dolora
Chua; they can no longer perform what was incumbent upon them under the terms of the
agreement, that is, to deliver the subject property to private respondent. This is another breach
of their agreement. As a consequence of the resolution of the contract of sale, the parties
should be restored to their original situation. Petitioners should, therefore, refund the
P50,000.00 down payment they received.

73. Filoil Marketing Corp. vs IAC et. al (GR 67115 Jan. 20, 1989)
FACTS: This case arose from a sale of a piece of land, owned by private respondent, Pabalan,
in favor of Villa Rey Transit. Upon receipt of the title thereto, the land was immediately
mortgaged on behalf of Villa Rey Transit to the herein petitioner as security for a loan, from the
former defaulted; hence the mortgage was extrajudicially foreclosed and the land was sold at
public auction, in which petitioner is the highest bidder. Upon learning of such developments,
Pabalan filed a complaint in the CFI, asking for the rescission of the contract and for damages.
The court held in favor of complainant, later affirmed by the CA.
ISSUE: Whether or not the contract can still be rescinded despite the presence of a third party,
the petitioner, which is supposedly an innocent purchaser of the property.
HELD: No. The Court of Appeals erred in holding that the contract of sale was subject to
rescission on the ground of non-compliance with one of its conditions, presumably the payment
of the purchase price, under Article 1191 of the said Code. That ground was merely assumed
and not established. In fact, it did not exist at the time of the filing of the complaint. It follows that
if the contract was not rescissible as to the other defendants, much less would it be rescissible
as to the petitioner, which was not even a party to that contract.

74. Angeles vs Calasanz et.al (GR 42283 March 18, 1985)

FACTS: Defendants-appellants and plaintiffs-appellees entered into a contract to sell a piece of
land, for the amount of P3,920.00 plus 7% interest per annum. The plaintiffs-appellees paid the
monthly installments until July 1966, when their aggregate payment already amounted to P4,
533.38. The defendants-appellants requested the remittance of past due accounts, and
cancelled the said contract because the plaintiffs failed to do so for more than 4 months. Hence,
plaintiffs-appellees filed a case before the CFI to compel the defendants to execute in their favor
the
final
deed
of
sale.
ISSUE: Whether or not the contract to sell was validly cancelled by the defendants-appellants.
HELD: No. The breach of the contract adverted to by the defendants-appellants is so slight and
casual when the plaintiffs-appellees had already paid the monthly installments for a period of
almost nine (9) years. Furthermore, although the principal obligation was only P 3,920.00
excluding the 7 percent interests, the plaintiffs- appellees had already paid an aggregate

amount of P 4,533.38. To sanction the rescission made by the defendants-appellants will work
injustice to the plaintiffs- appellees. It would unjustly enrich the defendants-appellants. Article
1234 of the Civil Code also provides that if the obligation has been substantially performed in
good faith, the obligor may recover as though there had been a strict and complete fulfillment,
less damages suffered by the obligee.

75. Ouano vs CA (GR 95900 July 23, 1992)

FACTS: Petitioner leased his motor vessel to respondent Rafols, subject to the condition that
the latter should operate the vessel for his own benefit, and should not sublet or sub-charter the
same without the knowledge and written consent of the owner. Rafols later contracted with
respondent Market Developers, Inc. (MADE) through its group manager, respondent Chua, to
transport cement in the mentioned vessel for a freightage of P46, 150.00, without consent of
petitioner. The amount was paid to Rafols. Petitioner filed a complaint in the RTC, seeking
payment of P23,000.00 representing the freight charges for the cement cargo, with damages.
ISSUE: Whether or not MADE and Chua are liable for damages to petitioner by being bound by
the contract of lease between the latter and Rafols.
HELD: No. The obligation of contracts is limited to the parties making them and, ordinarily, only
those who are parties to contracts are liable for their breach. Parties to a contract cannot
thereby impose any liability on one who, under its terms, is a stranger to the contract, and, in
any event, in order to bind a third person contractually, an expression of assent by such person
is necessary. The charter contract was entered into only by and between petitioner and
respondent Rafols, and the other private respondents were neither parties thereto nor were they
aware of the provisions thereof. The act of the charterer in sub-chartering the vessel, in spite of
a categorical prohibition may be a violation of the contract, but the owner's right of recourse is
against the original charterer, either for rescission or fulfillment, with the payment of damages in
either case.

76. Suria vs IAC (GR 73893 June 30, 1987)

FACTS: Private respondents entered into a Deed of Sale with Mortgage with petitioners over a
parcel of land owned by the former. Petitioners failed to pay the stipulated installments, only one
installment was paid despite repeated demands, thus violating the terms and conditions of the
contract. Respondents then filed for the rescission of the contract, which was favorably granted
by the court.
ISSUE: Whether or not the subsidiary and equitable remedy of rescission is available in the
presence of the remedy of foreclosure in the light of Art. 1383.
HELD: No. The parties had entered into a contract of sale where the vendor obligates himself to
transfer the ownership of and to deliver a determinate thing to the buyer, who is obligated to pay

a price certain in money or its equivalent. The respondents have complied with their part and
parted with the title. The buyer fulfilled his end of the bargain when he executed the deed
of mortgage. The relationship between the parties is no longer as buyer and seller, because the
contract of sale has been perfected and consummated and it is already of a mortgagor
and mortgagee. The petitioners breach of obligation is not with respect to the perfected contract
of sale but in the obligations created by the mortgage contract. The remedy of rescission is
not a principal action retaliatory in character but becomes a subsidiary one; which by law is
available only in the absence of any other legal remedy. Foreclosure here is not a remedy
accorded by law, but is a specific provision found in the contract.

77. Aparri vs CA (L-30057 Jan. 31, 1984)

FACTS: Petitioner was appointed as General Manager of NARRA, through the approval of
Resolution No. 13 by the private respondent. On March 15, 1962, Resolution No. 24 was
approved by the Board of Directors, which states that the incumbent General Manager shall
perform his duty until March 31,1962. Petitioner filed a mandamus with preliminary injunction
with the CFI. The petition prays for the annulment of the resolution of NARRA board.
ISSUE: Whether or not Resolution No. 24 was a removal or dismissal of petitioner without
cause.
HELD: No. It was affirmed that the term of office of petitioner expired on March 31, 1962. In the
case at bar, the term of office is not fixed by law. However, the power to fix the term is rested in
the Board of Directors, subject to the recommendation of the office of economic coordination
and the approval of the President of the Philippines. Resolution No. 24 speaks of no removal
but an expiration of the term of office of the petitioner.
78. New Frontier Mines, Inc. vs NLRC (GR 51578 May 29, 1984)
FACTS: Briones was employed by petitioner, which later assigned him at the company's
chromite project in Camarines Sur as chief accountant and administrative officer, performing
various duties and considered to be a managerial employee. He was charged with incurring
cash shortages, and later stopped reporting to work without permission or notice to the
company. He was fired as a result. A complaint for illegal dismissal was filed by petitioner. The
Labor Arbiter ordered his reinstatement with backwages. The company filed a petition for
certiorari.
ISSUE: Whether or not petitioner was illegally dismissed.
HELD: No. The Labor Arbiter and Commissioners acted with grave abuse of discretion in
ordering the reinstatement with backwages of Briones, a managerial employee. As a managerial
employee, the company had the right to terminate Briones' services "for lack of confidence" and
abandonment of work.
79. SANTOS VS COURT OF APPEALS

G.R NO. 60210

MARCH 27, 1984
FACTS:
Private respondent, Aurora Gutierrez, instituted an unlawful detainer case in the City
Court of Manila against petitioners Arturo P. Santos and Adelina Y. Santos on grounds that she
needs the premises for her personal use and that the petitioners were delinquent in the payment
of rentals of the subject apartment.
Petitioners admitted that they are the legitimate tenants and/or lessees of the subject
apartment with the present rental rate of P250.00 a month on a month-to-month contract of
lease.
The City Court decided and ordered the defendants to vacate the premises in question
and surrender its possession to the plaintiff. They were also ordered to pay plaintiff for the
delinquent rental fees. Petitioners appealed to the CFI which found the instant decision as in
accordance with the law. Petitioners then went to the CA on a petition for review.
ISSUE:
Whether the lessor may judicially eject the lessees even when the contract of lease is
said to be month-to-month
HELD:
Yes. The judicial ejectment lies when the lease is for a definite period or when the fixed
or definite period agreed upon has expired. A month-to-month period expires each month and
may be terminated at the end of each month. The lease as agreed upon by the parties is a
lease with a definite period which follows that the private respondent can enforce the right to
judicially eject the petitioners from the premises. The petition is hereby dismissed.
80. BALUCANAG VS JUDGE FRANCISCO
GR NO. 33422
MAY 30, 1983
FACTS:
Charvet owns a lot in Pandacan, Manila. In 1952, the said lot was leased to respondent
Stohner for a period of 5 years at the monthly rental of 2140.00. Stohner made fillings on the
land and constructed a house. On 1966, Charvet sold the lot to petitioner Balucanag. For
Stohners failure to pay the rents, Balucanag, thru counsel, wrote Stohner a letter demanding
that he vacate the premises. Stohner claimed that he was a builder in good faith.
Balucanag instituted in the City Court of Manila an ejectment suit against Stohner which
rendered a decision in favor of Balucanag. On appeal by Stohner, the CFI of Manila, presided
by Judge Francisco set aside the decision and held that Stohner was a builder in good faith
because he had constructed the residential house with the consent of the original lessor,
Charvet. And that after expiration of the lease contract on 1957, Charvet did not order for
Stohners ejectment nor removal of the house.
Balucanag filed petition for review.
ISSUE:
Whether Balucanag can terminate the lease considering that the contract between
Stohner and Charvet had already expired on 1957
HELD:

Yes. An implied new lease was created between Balucanag and Stohner, the period of
which is established by Art. 1687 of the Civil Code:
Art. 1687. If the period for the lease has not been fixed, it is understood to be from year
to year, if the rent agreed upon is annual; from month to month, if it is monthly: from
week to week, if the rent is weekly: and from day to day, if the rent is to be paid daily. ...
Under the above article, the duration of the new lease must be deemed from month to
month, the agreed rental in the instant case being payable on a monthly basis. The lessor may
thus terminate the lease after each month with due notice upon the lessee. After such notice,
the lessee's right to continue in possession ceases and an action of unlawful detainer may be
brought against him.
81. Ace-Agro Development Corp. vs CA
GR 119729
January 21, 1997
FACTS:
Ace-Agro had been cleaning soft drink bottles and repairing wooden shells for Cosmos
within its company premises in San Fernando, Pampanga. On April 25, 1990, a fire broke out in
the Cosmos plant. As a result, Ace-Agros work stopped. On May 15, 1990, Ace-Agro requested
Cosmos to resume its services but they were advised that on account of the fire destroying
nearly all the bottles and shells, Cosmos was terminating their contract. Ace-Agro requested
Cosmos to reconsider its decision but upon receiving no reply, they informed the employees of
the termination of their employment, which led the employees to file a complaint for illegal
dismissal before the Labor Arbiter against both Ace-Agro and Cosmos. Ace-Agro sent another
letter for reconsideration to Cosmos to which they replied that they could resume work but
outside company premises. Ace-Agro refused the offer, claiming that to work outside would
incur additional transportation costs. Cosmos then advised Ace-Agro that they could resume
work inside the company premises but then Ace-Agro unjustifiably refused because it wanted
and extension of the contract to make up for the period of inactivity.
ISSUE:
Because the suspension of work under a contract has been brought about by force
majeure, is the period during which work has been suspended justify an extension of the term of
the contract?
HELD:
No. The suspension of work due to fire does not merit an automatic extension. The
stipulation that in the event of a fortuitous event or force majeure the contract shall be deemed
suspended during the said period does not mean that it stops the running of the period the
contract has been agreed upon to run. The fact that the contract is subject to a resolutory
period, which relieves the parties of their respective obligations, does not stop the running of the
period of their contract.
82. Millare vs Hernando
GR NO. 55480
JUNE 30, 1987

FACTS:
On June 17, 1975, a five-year Contract of Lease was executed between Pacifica Millare
and Elsa Co married to Antonio Co. Co would rent the Peoples Restaurant at P350 per
month. In May to July 1980, a dispute arose when Millare informed the Co spouses that they
would continue leasing the restaurant as long as they were amenable to paying P1200 per
month. A counter-offer of P700 was made by Co, to which Millare allegedly stated that the
amount of monthly rentals could be resolved at a later time which Co took to mean that the
Contract of Lease had been renewed. In contrast, Millare flatly denies ever having considered or
offered a renewal of the Contract of Lease. On July 22, Millare requested them to vacate the
premises, and Co reiterated her unwillingness to pay P1200 for being excessive and their
intention to deposit the rentals in court, as Millare refused to accept their counter-offer. Co
spouses filed a complaint with the CFI of Abra claiming that renewal of the Contract of Lease
stated a valid cause of action. Millare filed an ejectment case against Co. The judge ordered the
renewal of the Contract of Lease and allowed Co to deposit the rentals in Court following
Art.1197 of the Civil Code.
ISSUE:
(1) Whether or not the private respondents, Co spouses, have a valid cause of action
against the petitioner
(2) Whether Art.1197 of the Civil Code is applicable to the case at bar
HELD:
(1) No. Paragraph 13 of the Contract of Lease can only mean that the lessor and lesee
may agree to renew the contract upon their reaching agreement on the terms and
conditions to be embodied in such renewal contract. Failure to reach agreement on
the terms and conditions of the renewal contract will prevent the contract from being
renewed at all. In the instant case, the lessor and the lessee conspicuously failed to
reach agreement on both the amount of the rental and on the term of the renewed
contract.
(2) No. Article 1197 of the Civil Code provide as follows:
If the obligation does not fix a period, but from its nature and the circumstances it
can be inferred that a period was intended, the courts may fix the duration
thereof.
The courts shall also fix the duration of the period when it depends upon the will
of the debtor.
In every case, the courts shall determine such period as may, under the
circumstances, have been probably contemplated by the parties. Once fixed by
the courts, the period cannot be changed by them. (Emphasis supplied.)
The first paragraph of Article 1197 is clearly inapplicable, since the Contract of Lease did in fact
fix an original period of five years, which had expired. It is also clear from paragraph 13 of the
Contract of Lease that the parties reserved to themselves the faculty of agreeing upon the
period of the renewal contract. The second paragraph of Article 1197 is equally clearly
inapplicable since the duration of the renewal period was not left to the will of the lessee alone,
but rather to the will of both the lessor and the lessee. Most importantly, Article 1197 applies
only where a contract of lease clearly exists. Here, the contract was not renewed at all, there
was in fact no contract at all the period of which could have been fixed.

83. JEREOS VS CA
GR NO. 48747
SEPTEMBER 30, 1982
FACTS:
Private respondent, Padorla, is the holder of a certificate of Public Convenience for the
operation of a jeepney line in Iloilo City. On 1971, one of his jeepneys driven by Jaravilla, hit
Judge Rodriguez and his wife resulting to the death of Judge Rodriguez and causing injuries to
the wife. Jaravilla was convicted of the crime of Homicide and Physical injuries through
Reckless Imprudence and sentenced accordingly. Soledad, the wife, and her children filed with
the CFI of Iloilo an action for damages against Jaravilla (driver), Padorla (holder) and Jereos,
the actual owner of the jeepney.
Jereos denied ownership of the jeepney and claimed that the plaintiffs have no cause of
action against him. Padorla also claimed that he was only the franchise owner and has nothing
to do with the actual control, operation and supervision of the jeepney which is under Jereos
control.
The CFI rendered judgment ordering Jaravilla and Padorla to pay jointly and severally to
the plaintiffs. Both appealed to the CA contending that Jereos should also be jointly and
severally liable with the damages incurred by them. The CA held that Jereos should be jointly
and severally liable for the damages. Jereos appealed from the decision.
ISSUE:
Whether Jereos is solidarily (jointly and severally) liable with Javarilla and Padorla

HELD:
Yes. In a civil action due to a quasi-delict (culpa aquiliana), the registered owner, the
actual owner, and the driver of the jeep involved are solidarily liable. The registered owner or
the operator has the right to be indemnified by the real or actual owner of the amount that he
may be required to pay as damage for the injury caused.
84. REPUBLIC PLANTERS BANK VS CA
GR NO. 93073
DECEMBER 21, 1992
FACTS:
In 1979, World Garment Manufacturing, through its board, authorized Shozo Yamaguchi
(president) and Fermin Canlas (treasurer) to obtain credit facilities from Republic Planters Bank
(RPB). For this, 9 promissory notes were executed. Each promissory note was uniformly written
in the following manner:
___________, after date, for value received, I/we, jointly and severally promise to pay to
the ORDER of the REPUBLIC PLANTERS BANK, at its office in Manila, Philippines, the
sum of ___________ PESOS(.) Philippine Currency
Please credit proceeds of this note to:
________ Savings Account ______XX Current Account
No. 1372-00257-6 of WORLDWIDE GARMENT MFG. CORP.
Sgd. Shozo Yamaguchi
Sgd. Fermin Canlas

The note became due and no payment was made. RPB eventually sued Yamaguchi and
Canlas. Canlas, in his defense, averred that he should not be held personally liable for such
authorized corporate acts that he performed inasmuch as he signed the promissory notes in his
capacity as officer of the defunct Worldwide Garment Manufacturing.
ISSUE:
Whether or not Canlas should be held liable for the promissory notes.
HELD:
Yes. The solidary liability of private respondent Fermin Canlas is made clearer and
certain, without reason for ambiguity, by the presence of the phrase joint and several as
describing the unconditional promise to pay to the order of Republic Planters Bank. Where an
instrument containing the words I promise to pay is signed by two or more persons, they are
deemed to be jointly and severally liable thereon.
Canlas is solidarily liable on each of the promissory notes bearing his signature for the
following reasons: The promissory notes are negotiable instruments and must be governed by
the Negotiable Instruments Law.
Under the Negotiable lnstruments Law, persons who write their names on the face of
promissory notes are makers and are liable as such. By signing the notes, the maker promises
to pay to the order of the payee or any holder according to the tenor thereof.
85.PURITA ALIPIO VS CA
GR NO. 134100
SEPTEMBER 29, 2000
Facts:
The trial court ordered petitioner and Manuel spouses to pay private respondent the
unpaid balance of the agreed rent in the amount of P50,000 without specifying whether the
amount is to be paid by them jointly or solidarily.
Issue:
Whether the obligation to pay is jointly or solidarily
Held:
The obligation is joint. Applying Art 1207 of the Civil Code, the obligation of petitioner
and the Manuel spouses is presumed to be only JOINT. If from the law or the nature or the
wording of the obligation the contrary does not appear, an obligation is presumed only to be
joint. The debt is divided into as many equal shares as there are debtors, each debt being
considered as distinct from one another.
Art. 1207. Reads as follows:
The concurrence of two or more creditors orof two or more debtors in one and the same
obligation does not imply that each one of the former has a right to demand, or that each
one of the latter is bound to render, entire compliance with the prestation. There is a
solidary liability only when the obligation expressly so states, or when the law or
the nature of the obligation requires solidarity.
86. CONSTANTE AMOR DE CASTRO VS CA
GR NO. 115838
JULY 18, 2002

FACTS:
Private respondent Artigo sued petitioners Constante and Amor De Castro to collect the
unpaid balance of his brokers commission from the De Castros.
The appellants, De Castros, were co-owners of 4 lots in Cubao, Quezon City. The
appellee, Artigo, was authorized by appellants to act as real estate broker in the sale of these
properties for the amount of P23,000,000.00, 5% of which will be given to the agent as
commission. Appellee first found the Times Transit Corporation and 2 lots were sold. In return,
he received P48,893.76 as commission.
Appellee apparently felt short changed because according to him, his total commission
should be P352,500.00 which is 5% of the agreed price of P7,050,000.00 paid by Times Transit
Corporation to appellants for the 2 lots and that it was he who introduced the buyer to appellants
and unceasingly facilitated the negotiation which ultimately led to the consummation of the sale.
Hence, he sued to collect the balance of P303,606.24 after having received P48,893.76 in
advance.
Appellants argued that appellee is selfishly asking for more than what he truly deserved
as commission to the prejudice of other agents who were more instrumental to the
consummation of the sale and that there were more or less 18 others who took active efforts.
The De Castros argued that Artigos complaint should have been dismissed for failure to
implead all the co owners of the 2 lots. . The De Castros contend that failure to implead such
indispensable parties is fatal to the complaint since Artigo, as agent of all the four co-owners,
would be paid with funds co-owned by the four co-owners.
It was shown also that Constante Amor De Castro signed the authorization of Artigo as
owner and representative of the co-owners.
ISSUE:
Whether or not the complaint merits dismissal for failure to implead other co-owners as
indispensable parties
HELD:
No. The De Castros contentions are devoid of legal basis. The CA explained that it is
not necessary to implead the co-owners since the action is exclusively based on a contract of
agency between Artigo and Constante. The rule on mandatory joinder of indispensable parties
is not applicable to the instant case.
Constante signed the note as owner and as representative of the other co-owners.
Under this note, a contract of agency was clearly constituted between Constante and Artigo.
Whether Constante appointed Artigo as agent, in Constantes individual or representative
capacity, or both, the De Castros cannot seek the dismissal of the case for failure to implead the
other co-owners as indispensable parties. The De Castros admit that the other co-owners are
solidarily liable under the contract of agency, citing Article 1915 of the Civil Code, which reads:
Art. 1915. If two or more persons have appointed an agent for a common transaction or
undertaking, they shall be solidarily liable to the agent for all the consequences of the
agency.
The solidary liability of the four co-owners, however, militates against the De Castros
theory that the other co-owners should be impleaded as indispensable parties.
When the law expressly provides for solidarity of the obligation, as in the liability of coprincipals in a contract of agency, each obligor may be compelled to pay the entire obligation.
The agent may recover the whole compensation from any one of the co-principals, as in this
case.

Indeed, Article 1216 of the Civil Code provides that a creditor may sue any of the
solidary debtors. This article reads:
Art. 1216. The creditor may proceed against any one of the solidary debtors or some or
all of them simultaneously. The demand made against one of them shall not be an
obstacle to those which may subsequently be directed against the others, so long as the
debt has not been fully collected.
87. OPERATORS INC. VS AMERICAN BISCUIT CORP., INC.
GR NO. 34767
OCTOBER 23, 1987
FACTS:
Plaintiff American Biscuit Company (ABC), a manufacturer of biscuit, candy and bubble
gum products in financial distress, entered into an agreement with defendant Operators Inc.
where it ceded the entire, total and complete present operation of its business in consideration
for which Operators Inc. undertook to answer for existing obligations of the plaintiff to its several
creditors and to compensate plaintiff with a percentage of the gross profits realized in the course
of the operations.
Barely 10 months thereafter, ABC and Operators Inc, entered into another agreement
(Tripartite Agreement) with defendant Associated Biscuit Operators. Associated agreed to
engage in the manufacture and marketing of the biscuit products of ABC under the terms and
conditions of the Operating Contract of September 26, 1953.
Operators an Associated had both undertaken to pay ABCs obligation owing to its
various creditors. Defendants would share 50-50 in the monthly installments of the P110,000.00
unpaid balance of the loan (China Banking Corporation). This arrangement was religiously
complied with by the Operators Inc. which paid P1500.00 monthly, making a total payment of
more than P100,000.00 including interest. Defendant Associated in turn, failed to make good its
commitments to pay its share of P55,000.00.
America Biscuit filed a complaint against Operators Incorporated and Associated Biscuit
for the cancellation of the Operating Contract and the Tripartite Agreement, with prayers to put
Associated Biscuit under receivership and for damages. American Biscuit maintained that the
payment of its indebtedness and of its overhead expenses was a joint and solidary obligation of
Operators and Associated Biscuit.
ISSUE:
Whether or not the payment of indebtedness to ABCs creditors by Operators and
Associated Biscuit was a solidary obligation
HELD:
The position of Operators that under the Operating Contract and the Tripartite
Agreement it is not answerable for the misfeasance of Associated, is belied by the very
provisions of the Tripartite Agreement, thus:
10. Incorporating Clauses.
Paragraphs 9, 10, 11, the provisions on Board of Arbitrators, 14, 15, 16 and 17 of the contract of
September 26, 1953 between the American Biscuit Co., Inc. and Operators Incorporated are
hereby incorporated into this Contract by way of reference and made an essential part hereof;
and the word OPERATORS mentioned in said paragraphs is to be understood as to include
the Associated Biscuit Operators Inc., for purposes of this Contract; and both the Operators
Incorporated and the Associated Biscuit Operators Inc., in so far as liabilities and obligations

therein contained in said paragraphs shall be made answerable to the American Biscuit Co.,
Inc., jointly and severally.
There is thus no mistaking the fact that Operators and Associated had assumed, per their
agreements, Americans liabilities to its creditors in solidum.
Article 1207 of the new Civil Code states that: "there is a solidary liability when the obligation
expressly so states . . ."
What may have led Operators in denying the solidary character of its obligations was the fact
that it was engaged in the manufacture of candy whereas Associated Biscuit was supposed to
manufacture biscuits, and the fact that the two operators were required to invest different
minimum amounts in the venture. But these conditions do not alter the solidary nature of their
obligations as expressly provided. According to Article 1211 of the Civil Code, "solidarity may
exist although the debtors may not be bound in the same manner and by the same periods and
conditions." Accordingly, the disparity in their functions under the contracts does not vary the
fact that they were bound, in connection with Americans liabilities, jointly and severally.
88.Ouano Arrastre Service, Inc. vs Aleonor et. al (GR 97664 Oct. 10, 1991) pending

89. COUNTRY BANKERS INSURANCE CORP. VS CA

GR 85161
SEP. 11, 1991

FACTS:
Lessor Ventanilla and Lessee Sy, entered into a lease agreement over a theater. The
lease was for six years. After more than two years of the operation of the theaters, Ventanilla
made demands for the repossession of the leased properties in view of Sys arrears in monthly
rentals and non-payment of amusement taxes. In pursuance of their latter agreement, Sys
arrears in rental in the amount of P125,445 was reduced to P71,028. However, the accrued
amusement tax liability of the three theaters to the City Government had accumulated to
P84,000 despite the fact that Sy had been deducting the amount of P4,000 from his monthly
rental with the obligation to remit the said deductions to the city government. Hence, letters of
demand were sent to Sy demanding payment of the arrears in rentals and amusement tax
delinquency.
When Sy failed to pay the amounts in full, despite demands, Ventanilla padlocked the
gates of the three theaters under lease and took possession thereof. Sy filed an action for
reformation and injunction. By virtue of the injunction, Sy regained possession of the theater.
The trial court held that Sy is not entitled to reformation. On the counterclaim, the court found
that Ventanilla was deprived of the enjoyment of the leased premises and suffered damages as
a result of the fi ling of the case by Sy and his violation of theterms and conditions of the
agreement. It held that Ventanillais entitled to recover the damages in addition to the arrears in

rentals and amusement tax delinquency of Sy and the accrued interest thereon. It found that as
of the end of Nov. 1980, whenVentanilla regained possession of the three theaters, Sys unpaid
rentals and amusement tax liability amounted to P289,534. In addition, it held Sy under
obligation to pay P10,000 every month from Feb. to Nov. 1980 or the total amount of P100,000
with interest on each amount of P10,000 from the time the same became due. Thus, P10,000
portion of the monthly lease rental was supposed to come from the remaining cash deposit of
Sybut with the consequent forfeiture of the remaining cash deposit of P290,000, there was no
more cash deposit from which said amount could be deducted further. It adjudged Sy to pay
attorneys fees equivalent to 10% of the amounts above-mentioned. Finally, the court held Sy
thru the injunction bond liable to pay P10,000 every month from Feb. to Nov. 1980. The amount
represents the supposed increase in rental from P50,000 to P60,000 in view of the offer of
someone to lease the three theaters involved for P60,000 a month. The Court of Appeals (CA)
sustained the trial court.
HELD:
The Supreme Court affirmed the CAs decision and held that inasmuch as the forfeiture
clause provides that the deposit shall be deemed forfeited, without prejudice to any other
obligation still owing by the lessee to the lessor, the penalty cannot substitute for the P100,000
supposed damage resulting from the issuance of the injunction against the P29,000 remaining
cash deposit. This supposed damage suffered by OVEC was the alleged P10,000 a month
increase in rental (from P50,000 to P60,000), which OVEC failed to realize for ten months from
Feb. to Nov. 1980 in the total sum of P100,000. This opportunity cost which was duly proven
before the trial court, was correctly made chargeable by the said court against the injunction
bond posted by CISCO. The undertaking assumed by CISCO under subject injunction refers to
all such damages as such party may sustain by reason of the injunction if the Court should fi
nallydecide that the Plaintiff was not entitled thereto. The CA correctly sustained the trial court
in holding that the bond shalland may answer only for damages which OVEC may suffer as a
result of the injunction. The arrears in rental, the unremitted amounts of the amusement tax
delinquency, the amount of P100,000 (P10,000 portions of each monthly rental which were not
deducted from plaintiffs cash deposit from Feb. to Nov. 1980after the forfeiture of said cash
deposit on Feb. 11, 1980) and attorneys fees which were all charged against Sy were correct
and considered by the CA as damages which OVEC sustained not as a result of the injunction.
90.Commercial Credit Corporation of Cagayan de Oro vs. CA (GR 78315 Jan. 2, 1989)
Facts: In 1978, private respondent Cagayan De Oro Coliseum, Inc. executed a promissory note
in the amount of P329,852.54 in favor of petitioner Commercial Credit Corporation of Cagayan
de Oro, to be paid in 36 monthly installments which is secured by a real estate mortgage.
However, respondent defaulted in the payment of the monthly installments due, petitioner
proceeded with the extrajudicial foreclosure of the real estate mortgage in September, 1979.
Then after, parties executed a compromise agreement on the basis which a compromise
judgment was rendered that the private respondent would still pay the debt so with the interest.
But, private respondent failed to comply again with the terms of the judgment for failure to pay
several installments in the amount of P70,152.65 which matured on July 13, 1982, petitioner
filed an ex-parte motion for the issuance of a writ of execution on March 4, 1983. The Court
granted the said motion in an order. At that point, a notice of auction sale was issued. Private
respondent filed a motion for reconsideration of said order alleging that it had paid its obligation.
The execution of the writ was suspended pending consideration of said motion. The trial court
denied said motion for reconsideration and, accordingly, a writ of execution was issued. The
Deputy Provincial Sheriff set the auction sale. Nevertheless said auction sale did not take place

as scheduled due to some internal problems in the office of sheriff. Private respondent then filed
a special civil action in the Court of Appeals to annul said compromise-judgment, alleging that
the trial court acted in serious violation of law and/or in grave abuse of discretion. In due course,
a decision was rendered by said appellate court, which the said present petition is denied and
the overdue and unpaid installments shall earn one half per cent (1/2%) per month penalty
charge until fully paid, plus two per cent (2%) of the outstanding balance as additional attorney's
fees. A motion for reconsideration of the decision was filed by petitioner. The petitioner alleged
that the CA committed a grave and reversible error in applying Article 1229 of the NCC and
modified the effects of the 3% penalty interest and attorneys fees after it upheld the legality of
the compromise judgment of the trial court.
Issue: Whether or not CA erred in modifying the compromise agreement.
Issue: Yes, CA erred in modifying said agreement since respondent appellate court has no
authority to reduce the penalty and attorney's fees therein stipulated which is the law between
the parties and is res judicata. When the parties entered into the said compromise agreement
and submitted the same for the approval of the trial court, its terms and conditions must be the
primordial consideration why the parties voluntarily entered into the same. The trial court
approved it because it is lawful, and is not against public policy or morals. Even CA upheld the
validity of the said compromise agreement. In the present case, the compromise agreement
was voluntarily entered into by the parties assisted by their respective counsel and was duly
approved by the trial court. Indeed, it was confirmed by the respondent appellate court to be
lawful. The modification of said compromise judgment by the respondent appellate court is
predicated on the provision of Article 1229 of the Civil Code which provides as that the Judge
shall equitably reduce the penalty when the principal obligation has been partly or irregularly
complied with by the debtor. Even if there has been no performance, the penalty may also be
reduced by the courts if it is iniquitous or unconscionable. The foregoing provision of the law
applies only to obligations or contract, subject of a litigation, the condition being that the same
has been partly or irregularly complied with by the debtor. The provision also applies even if
there has been no performance, as long as the penalty is iniquitous or unconscionable. It cannot
apply to a final and executory judgment.

91.INSULAR BANK OF ASIA AND AMERICA vs. SALAZAR G.R. No. 82082 March 25, 1988
Facts: On September 12, 1984, the plaintiff-appellant filed a complaint with the Regional Trial
Court alleging that the defendants-appellees were indebted to IBAA in the amount of
P87,647.19 as of September 15, 1984 including interest at 21% per annum penalty charges,
and attorney's fees. RTC rendered judgment in favor of the plaintiff ordering the defendant
spouses Salazar to pay IBAA the sum of Eleven Thousand Two Hundred Fifty Three Pesos and
Twenty Five Centavos ( P11,253.25 ), with interest thereon at the rate of 19% per annum from
the filing of the complaint on September 12, 1984 until fully paid. The defendants are further
ordered to pay the plaintiff-attorney's fees in the amount of one Thousand Pesos (P1, 000.00)
and to pay the costs. Petitioner IBAA appealed from the judgment of RTC of Leyte since there
has been an agreement between the evidenced by a promissory note where the defendantsappellees bound themselves jointly and severally to pay the amount with interest at 19% per
annum and with the express authority to increase without notice the rate of interest up to the
maximum allowed by law and subject further to penalty charges or liquidated damages upon
default equivalent to 2% per month on any amount due and unpaid. In the event the account

was referred to an attorney for collection, the defendants-appellees were also bound to pay 25%
of any amount due as attorney's fees plus expenses of litigation and costs. In accordance with
the agreement, the plaintiff-appellant increased the rate of interest to 21% pursuant to Central
Bank Circular No. 705 dated December 1, 1979.
Issue: Whether or not the plaintiff can increase the rate of interest from 19% to 21% in
accordance with the CBC No. 705.
Held: No, the plaintiff cannot do so. The Civil Code permits the agreement upon penalty apart
from the interest. Should there be such an agreement, the penalty does not include the interest,
and as such the two are different and distinct things which may be demanded separately. The
stipulation about payment of such additional interest rate partakes of the nature of a penalty
clause which is sanctioned by law.
92.ROSETE ET.AL VS PEROBER DEV.CORP (CA-GR 61031-R JULY 31,1981)
93.CORAZON and CONSTANTE AMOR DE CASTRO and vs. CA and FRANCISCO ARTIGO
Facts: Private respondent sued petitioners to collect the unpaid balance of his brokers
commission from the De Castros. Respondent was authorized by petitioners to act as real
estate broker in the sale of 4 properties for the amount of P23,000,000.00, five percent (5%) of
which will be given to the agent as commission. It was Artigo who first found Times Transit
Corporation, represented by its president Mr. Rondaris, as prospective buyer which desired to
buy two (2) lots. Then the sale of lots took place. Private respondent received from the spouses
P48, 893.76 as commission. It was then that the rift between the contending parties soon
emerged. Artigo apparently felt short changed because according to him, his total commission
should be P352,500.00 which is five percent (5%) of the agreed price of P7,050,000.00 paid by
Times Transit Corporation to appellants for the two (2) lots, and that it was he who introduced
the buyer to appellants and unceasingly facilitated the negotiation which ultimately led to the
consummation of the sale. Hence, he sued below to collect the balance of P303,606.24 after
having received P48,893.76 in advance. On the other hand, spouses completely traverse
appellees claims and essentially argue that appellee is selfishly asking for more than what he
truly deserved as commission to the prejudice of other agents who were more instrumental in
the consummation of the sale. But despite this and out of appellants pure liberality,
beneficence and magnanimity, appellee nevertheless was given the largest cut in the
commission (P48,893.76), although on the principle of quantum meruit he would have certainly
been entitled to less. Furthermore, the purchase price for the two lots was only P3.6 million as
appearing in the deed of sale and not P7.05 million as alleged by appellee. Thus, CA upheld the
trial courts finding that the purchase price was P7.05 million and not P3.6 million. Evidence
aliunde is admissible considering that Artigo is not a party, but a mere witness in the deed of
sale between the De Castros and Times Transit. CA explained that, the rule that oral evidence
is inadmissible to vary the terms of written instruments is generally applied only in suits between
parties to the instrument and strangers to the contract are not bound by it. Besides, Artigo was
not suing under the deed of sale, but solely under the contract of agency.
Issue: Whether or not Artigos claim has been extinguished by full payment, waiver or
abandonment.
Held: The De Castros reliance on Article 1235 of the Civil Code is misplaced. Artigos
acceptance of partial payment of his commission neither amounts to a waiver of the balance nor

puts him in estoppel. The word accept as used in Article 1235 of the NCC, it means to partake
a satisfactory or sufficient or agree to an incomplete or irregular performance. In this case at
bar, the mere receipt of a partial payment is not equivalent to the required acceptance of
performance as would extinguish the whole obligation.
94.CHONNEY LIM vs.CA and LEA CASTRO WHELAN and KEITH LAWRENCE WHELAN,
G.R. No. 104819 July 20, 1998
Facts: On March 1984, a conditional deed of sale was executed between appellant Lim and
appellee Lea Whelan. It was stipulated that appellee Whelan would buy from the appellant a
parcel of land with an area of 1,000 square meters for the sum of P600,000.00 or U.S.
$30,000.00 in U.S. $100 denomination. The property, however, was mortgaged to the Bank of
the Philippine Islands; the loan which on maturity on August 14, 1984, would be P269,960.88.
Lea Whelan then paid an earnest money of U.S. $9,000.00 consisting of U.S. $8,000.00 in
$100.00 bills and U.S. $1,000.00 in traveller's checks of $100.00; thereafter, she occupied the
premises. Subsequently, appellee Whelan allegedly gave appellant Lim U.S. $8,000.00, a bank
draft in the sum of P141,000.00 and later a check for P17,800.00 drawn against PCI Bank. After
these payments, a deed of absolute sale was signed by appellee Whelan and appellant Lim on
June 21, 1984, appellant Lim allegedly gave Whelan xeroxed copies of title, realty tax receipts
and bills for light and water. On August 23, 1984, appellant sent Whelan a telegram demanding
her to vacate the subject property. Whelan countered that she was already the owner thereof.
On August 24, 1984, a complaint for ejectment was filed against the, appellee. Lim claimed that
he was not paid the U.S. $8,000.00 due him; that the bank draft for the sum of P141,000.00 was
not honored; and that the check for P17,800.00 bounced. Defendant-appellee Lea Whelan,
however, replied that she paid the indebtedness of the appellant in the amount of P210,297.70
inclusive of interests and penalty charges hence, the mortgage of the property to the Bank of
the Philippine Islands was already cancelled. Consequently, appellee stopped the payment of
the bank draft and check in favor of the appellant. Appellee, likewise, claimed that she paid the
capital gains tax on the sale of the property to her in the amount of P14,994.00. Furthermore,
appellee Whelan alleged that the house which was built on the land she bought, had been
renovated at her expense for the amount of P180,000.00 to P200.000.00. When, in 1986, the
said house was damaged by a typhoon, it was repaired and had cost appellee P17,000.00.
Since the bank draft was dishonored and the PCI Bank check bounced, petitioner alleged that
he was not paid. He therefore instituted an action for rescission of contract. On the other hand,
Lea Whelan filed an action for specific performance demanding from Lim the delivery of the title
of said property which she has fully paid.
Issue: Whether or not Chonney Lim has been fully paid for the property in question.
Held: Yes, Lim has been fully paid and even took advantage in the situation. The payment of
loan and capital gains tax undoubtedly relieved the appellant from such obligations. The benefit
had been mutual, both appellant and appellee had obtained advantages on their sides the
appellant from his loan and appellee from being secured of the possession. The court found no
error with the ruling that petitioner is not entitled to rescission of the contract. It cannot be
denied that Chonney Lim is also not without fault in this case. It was Chonney Lim's obligation to
see to it that the property was free from all encumbrances and tax liabilities, among others,
which he obviously failed to do. The respondent court's ruling in considering the payment of the
mortgage loan and the capital gains tax by Lea Whelan as her full payment for the property is
but a fair disposition which this Court does not see any cogent reason to reverse.

95.RIDO MONTECILLO vs. IGNACIA REYNES and SPOUSES REDEMPTOR and ELISA
ABUCAY
Facts: Respondents Ignacia Reynes and Spouses Abucay filed a complaint for Declaration of
Nullity and Quieting of Title against petitioner Rido Montecillo. Reynes asserted that she is the
owner of a lot situated in Mabolo, Cebu City, covered by Transfer Certificate of Title No. 74196
and containing an area of 448 square meters. In 1981, Reynes sold 185 square meters of the
Mabolo Lot to the Abucay Spouses who built a residential house on the lot they bought. Reynes
alleged further that on March 1, 1984 she signed a Deed of Sale of the Mabolo Lot in favor of
Montecillo. Reynes, being illiterate, signed by affixing her thumb-mark on the document.
Montecillo promised to pay the agreed P47, 000.00 purchase price within one month from the
signing of the Deed of Sale. However, Petitioner Montecillos Deed of Sale does not state that
the P47, 000.00 purchase price should be paid by the former to Cebu Ice Storage (CIS).
Montecillo failed to adduce evidences before the trial court showing that Reyes had agreed
verbally or in writing that the said purchase price should be paid to CIS.
Issue: Whether or not Reynes and Montecillo agreed that said consideration of P47,000.00 in
the Deed of Sale be paid to Cebu Ice and Cold Storage to secure the release of the Transfer
Certificate of Title.
Held: No, there is no stipulation to the same. Absent any evidence showing that respondent had
agreed to the payment of the purchase price to any other party, the payment to be effective
must be made to the respondent, the vendor in the sale. Thus, petitioners payment to CIS is not
the payment that would extinguish the formers obligation to respondent under the Deed of Sale.
In summary, Montecillos Deed of Sale is null and void ab initio not only for lack of
consideration, but also for lack of consent.

96. ESMERALDA and REYNALDO ALCARAZ and vs. PEDRO M. TANGGA-AN, MENAS R.
TANGGA-AN, VIRGINIA III YVETTE R. TANGGA-AN, CECIL T. VILLAFLOR, HERMES R.
TANGGA-AN, VENUS R. TANGGA-AN, JUPITER R. TANGGA-AN, YVONNE T. FRI, VIVIEN
R. TANGGA-AN and HON. JUDGE P. BURGOS and THE COURT OF APPEALS, G.R. No.
128568. April 9, 2003
Facts: It was alleged in the complaint that the late Virginia Tangga-an (the spouse of respondent
Pedro Tangaa-an and mother of the rest of the respondents) leased a residential building
(house) located at Premier Street, Hipodromo, Cebu City to the petitioner spouses. The lease
contract was limited to the use and occupancy of the said residential building and did not
include the lot on which it was constructed because the said lot was then owned by the National
Housing Authority (NHA). Under the contract, the petitioner spouses bound themselves for five
years to pay Virginia a monthly rental of P4,000 beginning November 22, 1991. However, since
November 1993, they failed to pay rent. Thus, as of October, 1994, they were in arrears in the
amount of P48,000. Despite repeated demands by respondents to pay the rentals in arrears
and to surrender the possession of the residential building, the petitioner spouses refused to
vacate the same. Respondents sought to repossess the property for their own use and benefit.
On the other hand, the petitioner spouses alleged that, on July 23, 1993, that their payments to
Virgilio were made in good faith, who is the person in possession of credits in accordance with

Art. 1242. Payment made in good faith shall release the debtor. This, spouses pointed out that
they were released from the obligation. They claimed that Virgilio collected the rentals in his
capacity as co-owner and being son of Virginia, he was also entitled to the rent of the subject
house.
Issue: Whether or not the payments made to Virgilio which was made in good faith releases the
spouses from their obligation.
Held: No. Virgilio collected the rentals not as a co-owner but as the alleged sole owner of the
subject house. The petitioner spouses themselves admitted that Virgilio claimed sole ownership
of the house and lot. It would be incongruous for them to now assert payment in good faith to a
person they believed was collecting in behalf of his co-heirs after admitting that they paid rent to
Virgilio as the sole owner thereof. Hence, for violating of the terms of the lease contract, i.e.,
payment of rent, respondents can legally demand the ejectment of the petitioner spouses.

97.PABLO
V.
ZAGALA
and
PABLO
V.
ZAGALA
&
CO.
vs.
THE HONORABLE JOSE B. JIMENEZ, in his capacity as Presiding Judge of Branch VI,
Court of First Instance of Manila, and FRANCISCO G. GUBALLA, G.R. No. L-33050, July
23, 1987
Facts: This is a petition for certiorari and mandamus directly elevated by the petitioners to this
Court from the then Court of First Instance (now Regional Trial Court) of Manila. It seeks the
review and annulment of the Orders of the respondent judge in 1970, denying the petitioners'
Motion For Fixing The Peso Value Of Judgment In Dollars And For Issuance Of Writ Of
Execution To Enforce The Same, as well as the one dated December 19, 1970, denying for lack
of merit the petitioners' Motion For Reconsideration. Also, it prays that the respondent judge be
ordered to grant the petitioners' motion for the fixing of the peso equivalent of the judgment in
dollars as contained in the decision of the trial court and be compelled to issue the writ of
execution to enforce the same judgment. In 1967, the petitioners filed with the trial court a
complaint for the collection of sums of money allegedly due them from the private respondent.
On the cause of action, the amount of U.S. $9,404.14 equivalent to P36,864.23 at the current
exchange rate of P3.92 to the dollar, or the equivalent amount thereof based on the exchange
rate officially prevailing at the time of payment, plus interest thereon at nine (9%) percent based
and computed in U.S. dollars from the maturity dates of the drafts in question until full payment.
Without entering into any trial on the merits and after the case had been set for pre-trial, the
petitioners and the private respondent entered into a Compromise Agreement under date of
May 17, 1968. They filed this agreement with the trial court on the same date. That said
compromise agreement was approved and the parties are strictly enjoined to comply with the
terms and conditions thereof, which is made an integral part of the dispositive portion of this
decision. However, it was not fully complied with by the private respondent, prompting the
petitioners to file with the trial court a motion for the fixing of the peso value of the judgment in
dollars and for the issuance of a writ of execution to enforce the same on October 26, 1970.
Acting on this motion, the respondent judge, the Hon. Jose B. Jimenez, the new Presiding
Judge of Branch VI of the Court of First Instance of Manila, issued an order which denied the
motion filed on October 26, 1970, by counsel for the plaintiffs praying before Court fixing the
peso value of the judgment in the first cause of action in the complaint (which is in dollars) at the
present rate of P6.55 to the dollar, as per certification of the Far East Bank and trust Company;

Issue: Whether or not a judgment awarding an amount in U.S Dollars may be paid with its
equivalent amount in local currency.
Held: Yes, a judgment awarding an amount in U.S Dollars may be paid with its equivalent
amount in local currency in the conversion rate prevailing at the time of payment. If the parties
cannot agree on the same, the trail court should determine such conversion rate. Needless to
say, the judgment debtor may simply satisfy said award by paying in the full amount in U.S.
dollars. Thus, if the plaintiff files a motion to fix the peso value of the judgment in dollars, they
only intend to exercise the right granted to them by the present jurisprudence that the trial
court shall determine or fix the conversion rate prevailing at the time of payment, and it is error
for the trial court to deny said motion.

98.C.F. SHARP & CO., INC. vs. NORTHWEST AIRLINES, INC.

Facts: In 1974, respondent, through its Japan Branch, entered into an International Passenger
Sales Agency Agreement with petitioner, authorizing the latter to sell its air transport tickets.
Petitioner failed to remit the proceeds of the ticket sales, for which reason, respondent filed a
collection suit against petitioner before the Tokyo District Court which rendered judgment on
January 29, 1981, ordering petitioner to pay respondent the amount of 83,158,195 Yen and
damages for the delay at the rate of 6% per annum from August 28, 1980 up to and until
payment is completed. Unable to execute the decision in Japan, respondent filed a case to
enforce said foreign judgment with the Regional Trial Court of Manila. However, the case was
dismissed on the ground of failure of the Japanese Court to acquire jurisdiction over the person
of the petitioner. Respondent appealed to the Court of Appeals, which affirmed the decision of
the trial court. Respondent filed a petition for review with this SC. The court issued the writ of
execution against defendant C.F. Sharp ordering said defendant to pay the plaintiff the sum of
83,158,195 Yen at the exchange rate prevailing on the date of the foreign judgment on January
29, 1981, plus 6% per annum until May 19, 1983; and from said date until full payment, 12% per
annum (6% by way of damages and 6% interest) until the entire obligation is fully satisfied. In
1995, petitioner filed a petition for certiorari, assailing the aforequoted order. On May 29, 1996,
the case was referred to the Court of Appeals. Petitioner contended that it had already made
partial payments; hence, it was liable only for the amount of 61,734,633 Yen. Moreover, it
argued that it was not liable to pay additional interest on top of the 6% interest imposed in the
foreign judgment.
Issue: Whether or not stipulations on the satisfaction of obligations in foreign currency are valid.
Held: Under this law, stipulations on the satisfaction of obligations in foreign currency are void.
Payments of monetary obligations, subject to certain exceptions, shall be discharged in the
currency which is the legal tender in the Philippines. But since R.A. No. 529 does not provide
for the rate of exchange for the payment of foreign currency obligations incurred after its
enactment, the Court held in a number of cases that the rate of exchange for the conversion in
the peso equivalent should be the prevailing rate at the time of payment. The repeal of R.A. No.
529 by R.A. No. 8183 has the effect of removing the prohibition on the stipulation of currency
other than Philippine currency, such that obligations or transactions may now be paid in the
currency agreed upon by the parties. Just like R.A. No. 529, however, the new law does not
provide for the applicable rate of exchange for the conversion of foreign currency-incurred
obligations in their peso equivalent. It follows, therefore, that the jurisprudence established in

R.A. No. 529 regarding the rate of conversion remains applicable. Thus, the obligations in
foreign currency may be discharged in Philippine currency based on the prevailing rate at the
time of payment. The wisdom on which the jurisprudence interpreting R.A. No. 529 is based
equally holds true with R.A. No. 8183. Verily, it is just and fair to preserve the real value of the
foreign exchange- incurred obligation to the date of its payment.

99.ISIDRO M. ONGSIP vs. PRUDENTIAL BANK & TRUST CO., G.R. No. L-27328, May 30,
1983
Facts: This case is about the deduction from a depositor's current account of postdated check
and deposits on marginal credit allegedly by the depositor. The Prudential Bank & Trust Co.
appealed from the decision ordering the bank to pay Isidro M. Ongsip the sum of P225,484.95
with legal interest from June 2, 1955 until fully paid, the sum of P19,416.37 with legal interest
from July 14, 1955 until fully paid and P5,000 as attorney's fees. (Appeal before R.A. No. 5440.)
Ongsip had a current account with the Prudential Bank during the period from 1952 to 1960.
The bank debited against Ongsip's current account amounting to P25,484.95 and the sum of
P19,416.37 representing marginal depositors on six letters of credit opened with the bank, not
by Ongsip but by third persons. Ongsip made formal demands upon the bank for the restitution
of the debited amounts but the bank did not honor the demands. Ongsip then complained to the
Central Bank against the acts of the Prudential Bank but the Central Bank disclaimed
jurisdiction. According to the bank, it was especially arranged with Ongsip that the latter would
deposit postdated and immature checks, and the bank would debit them against his current
account, and when the checks matured, credit them to his current account: credit, then debit,
then credit again. The trial court did not believe that such a special arrangement existed. It was
an irregular banking practice. The trial court could not sanction such an irregularity. The bank
contends that the trial court erred in holding that Ongsip was damaged by debiting P225,484.95
against his account because it did not consider the re-crediting entries and other evidence
surrounding the transaction. Although the bank admitted that the crediting of postdated checks
to a current account is an irregular practice, it tolerated the irregularity because Ongsip was a
valued client.
Issue: Whether or not Ongsip was liable for the marginal deposits on six letters of credit which
were clandestinely purchased by him. The court found the bank's contention to be correct, as
shown in Exhibits 51 to 51-E, which prove Ongsip's assumption of the marginal deposits
involved in the six letters of credit. He is liable for that amount. However, a postdated check is
not a check at all, and a bank shall not deduct from a depositors current account the postdated
check issued by the depositor.

100.EVELYN J. SANGRADOR, joined by her husband RODRIGO SANGRADOR, SR. vs.

SPOUSES FRANCISCO VALDERRAMA and TERESITA M. VALDERRAMA, G.R. No. 79552
November 29, 1988
Facts: In 1983 the defendants-spouses Francisco and Teresita Valderrama obtained a
P500,000 loan from Manuel Asencio payable on or before April 12, 1984, and secured by a real
estate mortgage on their house and lot (actually 3 lots) in front of the Jaro Plaza in Iloilo City.
Foreseeing that they would not be able to pay the loan and redeem their property upon maturity

of the loan, the defendants scouted around for money-lenders who would be willing to lend them
money with which to pay off their mortgage to Asencio. Through the help of a loan broker,
Wilson Jesena, they were able to obtain on April 6, 1984 a P1,000,000 loan from the plaintiff
Teresita Sangrador, who is an aunt of Jesena, on the security of the same property which they
redeemed from Asencio. The loan was evidenced by a promissory note. The makers of that
note, jointly and severally undertake that in the event that an extraordinary inflation of the
Philippine Peso should supervene between now and eight (8) months after date, then the value
of the Philippine Peso at the time of the establishment of this obligation, shall be the basis of
payment pursuant to Art. 1250 of the Civil Code of the Philippines. It was acknowledged the
official exchange rate of the Philippine Peso to the US Dollar at P14.002 to $1. The
corresponding adjustment in the value of the Philippine Peso shall be made in the event that at
the time of the maturity of this obligation, the rate of exchange will have changed as a result of
the supervening inflation.
Issue: Whether or not the loan obtained by private respondents from petitioners was in the
amount of P1,400,000.00 or P1,000,000.00 only.
Held: The Promissory Note (Exh- B) and the Deed of Real Estate Mortgage (Exh. A) executed
by the respondents in favor of the petitioners indeed state that the loan is in the amount of
P1,400,000.00. However, the other documents executed by the parties contemporaneously with
said Promissory Note and Deed of Real Estate Mortgage clearly show that the actual loan, i.e.
the amount received by respondents, was only P1,000,000.00. Thus, for the payment made by
the petitioners for the account of the respondents to Manuel Asencio, thereby releasing the
mortgage on the property, so that it could in turn be mortgaged to the petitioners, the
respondents signed a receipt in favor of the petitioners in the amount of P625,000.00 (Exh. 2).
Hence, SC agreed with the finding of the Court of Appeals that the disputed amount of
P400,000.00 was a hidden interest that the petitioners had required the respondents to pay at
the maturity of the loan, but said amount of P400,000.00 was not received by or delivered to the
respondents. This conclusion is strengthened by the fact that the promissory note and the deed
of real estate mortgage (Exhs. B and A), strangely enough, do not contain any express
stipulation on interest, or rate of interest, when the loan involved therein is in the substantial
amount of allegedly P1,400,000.00. Since petitioners failed to prove the supervening of
extraordinary inflation between 6 April 1984 and 7 December 1984no proofs were presented
on how much, for instance, the price index of goods and services had risen during the
intervening periodan extraordinary inflation cannot be assumed; consequently, there is no
reason or basis, legal or factual, for adjusting the value of the Philippine Peso in the settlement
of respondents' obligation.

101. G.R. No. L-43446 May 3, 1988

FILIPINO
PIPE
AND
FOUNDRY
CORPORATION, plaintiff-appellant,
vs.
NATIONAL WATERWORKS AND SEWERAGE AUTHORITY, defendant-appellee.
FACTS:

NAWASA entered into a contract with the plaintiff FPFC for the latter to supply it with
centrifugally cast iron pressure pipes worth P270,187.50 to be used in the construction of the
Anonoy Waterworks in Masbate and in Samar.
NAWASA paid in installments on various dates, a Total of P134,680.00 leaving a
balance of P135,507.50 excluding interest. Having completed the delivery of the pipes, the
plaintiff demanded payment from the defendant of the unpaid balance of the price with interest
in accordance with the terms of their contract. When the NAWASA failed to pay the balance of
its account, the plaintiff filed a collection suit.
The trial court rendered judgment ordering the defendant to pay the unpaid balance of
P135,507.50 in NAWASA negotiable bonds, redeemable after ten years from their issuance with
interest at 6% per annum, P40,944.73 as interest up to March 15, 1966 and the interest
accruing thereafter to the issuance of the bonds at 6% per annum and the costs. Defendant,
however, failed to satisfy the decision. It did not deliver the bonds to the judgment creditor.
FPFC filed another complaint seeking an adjustment of the unpaid balance in
accordance with the value of the Philippine peso when the decision was rendered on November
23, 1967.
ISSUE: WON there exists an extraordinary inflation to justify the adjustment of NAWASAs
unpaid judgment obligation

RULING:
No, there is no extraordinary inflation. Extraordinary inflation exists "when there is a
decrease or increase in the purchasing power of the Philippine currency which is unusual or
beyond the common fluctuation in the value said currency, and such decrease or increase could
not have reasonably foreseen or was manifestly beyond contemplation the the parties at the
time of the establishment of the obligation.
While appellant's voluminous records and statistics proved that there has been a decline
in the purchasing power of the Philippine peso, this downward fall of the currency cannot be
considered "extraordinary." It is simply a universal trend that has not spared our country.

102. G.R. No. L-36706 March 31, 1980

COMMISSIONER
OF
PUBLIC
HlGHWAYS, petitioner,
vs.
HON. FRANCISCO P. BURGOS, in his capacity as Judge of the Court of First Instance of
Cebu City, Branch 11, and Victoria Amigable, respondents.

FACTS:
Victoria Amigable is the owner of parcel of land situated in Cebu City with an area of 6,167
square meters. Sometime in 1924, the Government took this land for road-right-of-way purpose.
The land had since become streets known as Mango Avenue and Gorordo Avenue in Cebu
City.
The Government proved the value of the property at the time of the taking thereof in 1924 of
deeds of conveyance executed in 1924 or thereabouts, of several parcels of land in the Banilad
Friar Lands in which the property in question is located, showing the price to be at P2.37 per
square meter. For her part, Victoria Amigable presented newspaper clippings of the Manila
Times showing the value of the peso to the dollar obtaining about the middle of 1972, which was
P6.775 to a dollar.

ISSUE:
Whether or not the provision of Article 1250 of the New Civil Code is applicable in determining
the amount of compensation to be paid to respondent Victoria Amigable for the property taken is
raised because the respondent court applied said Article by considering the value of the peso to
the dollar at the time of hearing

RULING:
ART. 1250. In case extra-ordinary inflation or deflation of the currency stipulated
should supervene, the value of the currency at the time of the establishment of
the obligation shall be the basis of payment, unless there is an agreement to the
contrary.
It is clear that the foregoing provision applies only to cases where a contract or
agreement is involved. It does not apply where the obligation to pay arises from law,
independent of contract. The taking of private property by the Government in the exercise of its
power of eminent domain does not give rise to a contractual obligation.

103. G.R. No. L-58961 June 28, 1983

SOLEDAD
SOCO, petitioner,
vs.
HON. FRANCIS MILITANTE, Incumbent Presiding Judge of the Court of First Instance of
Cebu, Branch XII, Cebu City and REGINO FRANCISCO, JR., respondents.

FACTS:
Soco leased her commercial building and lot situated at Manalili Street, Cebu City, to Francisco
for a monthly rental of P 800.00 for a period of 10 years renewable for another 10 years at the
option of the lessee. Francisco noticed that Soco did not anymore send her collector for the
payment of rentals and at times there were payments made but no receipts were issued.
After writing a letter, Francisco sent his payment for rentals by checks issued by the
Commercial Bank and Trust Company. Obviously, these payments in checks were received
because Soco admitted that prior to May, 1977, defendant had been religiously paying the
rental.
The factual background setting of this case clearly indicates that soon after Soco learned that
Francisco sub-leased a portion of the building to NACIDA, at a monthly rental of more than
P3,000.00 which is definitely very much higher than what Francisco was paying to Soco under
the Contract of Lease, the latter felt that she was on the losing end of the lease agreement so
she tried to look for ways and means to terminate the contract.
Soco filed a civil case seeking the annulment and/or reformation of the Contract of Lease.

ISSUE: WON there was substantial compliance with the requisites of consignation and so ruled
in favor of private respondent, Regino Francisco, Jr., lessee of the building
RULING:
The Court finds and rules that the lessee has failed to prove tender of payment except that in
Exh. 10; he has failed to prove the first notice to the lessor prior to consignation except that
given in Exh. 10; he has failed to prove the second notice after consignation except the two
made in Exh. 12; and he has failed to pay the rentals for the months of July and August, 1977
as of the time the complaint was filed for the eviction of the lessee.
The evidence is clear, competent and convincing showing that the lessee has violated the terms
of the lease contract and he may, therefore, be judicially ejected.

104. Avelino v velez

[G.R. No. L-48448. February 20, 1984.]

FACTS:
Five parcels of land all located at Katipunan Street, Cebu City, were formerly owned by Rodrigo

Velez, the father of petitioners. In an extrajudicial partition, the said lots were adjudicated to
Respondents.Petitioners made several demands to vacate upon respondents who asked an
extension of one year but thereafter, respondents changed their minds and refused to vacate.

Upon their refusal, petitioners filed an ejectment casealleging that except for Magin Velez, they
have no other lot of their own and are living on other persons premises; that respondents are
not only occupying the premises but also accepting boarders and/or using the same for
commercial purposes and that several demands have been made to give way to the needs of
petitioners and their respective families but respondents maliciously, abusively and defiantly
refused to accede to petitioners lawful demands.
In their answer, respondents admitted the ownership of the land by petitioners. But they alleged
that they have been occupying portions of the lots by virtue of oral agreements of lease for an
indefinite period, paying monthly rentals for their respective portions ranging from P4.00 to
P12.00; that the present action is barred by res judicata and or prior judgment and that the
present action, if at all there is any cause of action, is essentially one for unlawful detainer since
the last demand to vacate was made less than a year ago.

Issue: WON the failure of the owners to collect, or their refusal to accept the rentals is a valid
defense
RULING: No. Since this is a case of accion publiciana, the purpose of which is being to
establish who have a better right to possess. Although respondents had been paying nominal
rentals for some time, they did not thereby acquire the legal status of tenants. Squatting is
unlawful and no amount of acquiescence converts it into a lawful act. Furthermore, the failure of
the owners to collect, or their refusal to accept the rentals are not valid defenses. Article 1256 of
the Civil Code provides that "if the creditor to whom tender of payment has been made refuses
without just cause to accept it, the debtor shall be released from responsibility by the
consignation of the thing or sum due."cralavirtua1a
The right of the private respondents over the property which they own in order to use the same
as their residence, not being owners of any other dwelling place, may not be denied.

105. G.R. No. L-51767 June 29, 1982

LETICIA CO, assisted by her husband MUI YUK KONG, in substitution of CITADEL
INSURANCE
&
SURETY
CO.,
INC., plaintiff-appellee,
vs.
PHILIPPINE NATIONAL BANK, defendant-appellant.

FACTS:
Standard Parts Manufacturing Corporation borrowed from PNB a total of P4,296,803.56.
the said obligation was secured by the mortgages on the Baguio and Makati real estates of
STANDARD and the chattel mortgage on its personal properties. When STANDARD failed to
pay its obligation, PNB extrajudicially foreclosed the mortgage on the Baguio properties as well
as the chattel mortgage with PNB as the highest bidder for P1,514,305.00. subsequently, on
August 8, 1974, PNB also foreclosed the mortgage on the Makati property and purchased the
same, as the highest bidder, for P1,363,000.00
Meanwhile, CITADEL wrote PNB a letter stating therein its desire to redeem the
property, it being the alleged assignee of the right of redemption of Standard Parts with respect
only to said property. Citadel, however, offered to redeem the property for only P1,621,970.00.
In its reply to said letter, PNB, justifiably refused to accept the tender of payment of citadel
considering that the amount of P1,621,970.00 was very much lower than the PNBs
P3,366,546.42 per the Statement of Account of Standard Parts.

ISSUE:WON the tender of payment, lower than the total amount, should be accepted

RULING:Yes, the tender of P1.6 M should be accepted, although CITADEL should pay the full
amount of P3.3 M to PNB without any interest when it refused a redemption legally and validly
tendered.
PNB does not have to account to CITADEL/LETICIA CO for any of the rentals it had earned
from the time it took possession of the property. In the final analysis, instead of PNB losing
P1,744,576.42, under strict technical legal reasoning, as explained above, applying hereto the
principle of unjust enrichment, which We deem in the peculiar circumstances at this instant case
to be the fairest way of resolving this controversy, it would still be paid by petitioner a certain
amount, not to mention what must be quite substantial and considerable, the rentals the said
bank it has earned, which it does not have to account for.
The foreclosure of the security is a measure of last resort, hence when by the exercise of the
right of redemption, the bank can recover the money it has loaned, nothing could be more
proper than to allow the borrower to retain his property.

106. [G.R. No. 138588. August 23, 2001]

FAR EAST BANK & TRUST COMPANY, petitioner, vs. DIAZ REALTY INC., respondent.

FACTS:
Diaz and Company got a loan from PaBC [Pacific Banking Corporation] in the amount
of P720,000.00, with interest at 12% per annum, later increased to 14%, 16%, 18% and
20%. The loan was secured by a real estate mortgage over two parcels of land owned by the
plaintiff Diaz Realty.
In 1981, Allied Banking Corporation rented an office space in the building covered by the
mortgage contract, with the conformity of mortgagee PaBC, whereby the parties agreed that the
monthly rentals shall be paid directly to the mortgagee for the lessors account, either to partly
or fully pay off the aforesaid mortgage indebtedness.
In 1985, the Central Bank closed PaBC, placed it under receivership, and appointed Renan
Santos as its liquidator.
Sometime in December 1986, appellant FEBTC purchased the credit of Diaz & Company in
favor of PaBC.
Thus, Diaz tendered to FEBTC the amount of P1,450,000.00 through an Interbank check, in
order to prevent the imposition of additional interests, penalties and surcharges on its loan; that
FEBTC did not accept it as payment and instead, was asked to deposit the amount with the
defendants Davao City Branch Office, allegedly pending the approval of Central Bank
Liquidator Renan Santos. However, there was still no news whether or not it accept its tender of
payment, thushe filed this case at the Regional Trial Court of Davao City.
ISSUE:WON there was a valid tender of payment
RULING:Yes. For a valid tender of payment, it is necessary that there be a fusion
of intent, ability and capability to make good such offer, which must be absolute and must cover
the amount due. Though a check is not legal tender, and a creditor may validly refuse to accept
it if tendered as payment, one who in fact accepted a fully funded check after the debtors
manifestation that it had been given to settle an obligation is estopped from later on denouncing
the efficacy of such tender of payment.
Diaz intended to settle its obligation with petitioner is evident from the records of the case. After
learning that its loan balance wasP1,447,142.03, it presented to petitioner a check in the
amount of P1,450,000, with the specific notation that it was for full payment of its Pacific Bank
account that had been purchased by FEBTC. The latter accepted the check, even if it now
insists that it considered the same as a mere deposit. The check was sufficiently funded, as in
fact it was honored by the drawee bank. When petitioner refused to release the mortgage,
respondent instituted the present case to compel the bank to acknowledge the tender of
payment, accept payment and cancel the mortgage. These acts demonstrate respondents
intent, ability and capability to fully settle and extinguish its obligation to petitioner.
107. G.R. No. L-32116 April 2l, 1981

RURAL BANK OF CALOOCAN, INC. and JOSE O. DESIDERIO, JR., petitioners,

vs.
THE COURT OF APPEALS and MAXIMA CASTRO, respondents.
FACTS:
Respondent Maxima Castro, accompanied by Severino Valencia, went to the Rural Bank of
Caloocan to apply for an industrial loan. It was Severino Valencia who arranged everything
about the loan with the bank and who supplied to the latter the personal data required for
Castro's loan application. Having approved the loan for the amount of P3,000.00, Castro,
accompanied by the Valencia spouses, signed a promissory note corresponding to her loan in
favor of the bank.
On the same day, the Valencia spouses also obtained from the bank an equal amount of loan
for P3,000.00 in which Castro was the co-maker. The two loans were secured by a real-estate
mortgage on Castro's house and lot. For failure to satisfy the loans of P6,000 covering the two
promissory notes, the said property was sold at an auction sale.
Castro only learned later that the mortgage contract which was an encumbrance on her property
was for P6.000.00 and not for P3,000.00 and that she was made to sign as co-maker of the
promissory note without her being informed of this. Thus, she filed a suit praying for annulment
of the foreclosure sale of her property, and that thru mistake on her part or fraud on the part of
Valencias she was induced to sign as co-maker of a promissory note and to constitute a
mortgage on her house and lot to secure the questioned note. At the time of filing her complaint,
respondent Castro deposited the amount of P3,383.00 with the court a quo in full payment of
her personal loan plus interest.
ISSUE:WON the promissory note may be invalidated and the mortgage contract valid only up to
P3,000
RULING:Yes. The loan for P6,000 was obtained by fraud perpetrated on Castro by the
Valencias who had abused her confidence, taking advantage of her old age and ignorance of
her financial need. Respondent court added that "the mandate of fair play decrees that she
should be relieved of her obligation under the contract" pursuant to Articles 24 and 1332 of the
Civil Code.Thus, as a result of the fraud upon Castro and the misrepresentation to the bank
inflicted by the Valencias both Castro and the bank committed mistake in giving their consents
to the contracts. In other words, substantial mistake vitiated their consents given. For if Castro
had been aware of what she signed and the bank of the true qualifications of the loan
applicants, it is evident that they would not have given their consents to the contracts.
Pursuant to Article 1342 of the Civil Code which provides: Misrepresentation by a third person
does not vitiate consent, unless such misrepresentation has created substantial mistake and the
same is mutual.
Thus, the fraud particularly averred in the complaint, having been proven, is deemed sufficient
basis for the declaration of the promissory note invalid insofar as it affects Castro vis-a-vis the
bank, and the mortgage contract valid only up to the amount of P3,000.00.
108. G.R. No. L-56196 January 7, 1986

RESTITUTA, JESUS, ISIDRO AND JOEL, ALL SURNAMED HULGANZA AND MATILDE
COLLAMAR, petitioners,
vs.
THE HONORABLE COURT OF APPEALS AND BASILIA GEMARINO, respondents.
FACTS:
Lot 161, Pls. 256, the subject matter of the present case, is registered in the name of
spouses NicomedezHulganza and MatildeCollamarwas issued pursuant to a free patent. Before
NicomedezHulganza died leaving as his heirs herein petitioners. The said property was sold on
April 21, 1971 in favor of the defendant BasiliaGemarino in the amount of P10,000.00.Since that
date, up to the present private respondent has been in possession of the property peacefully,
openly or publicly, adversely and without interruption in the concept of owner.
But on April 13, 1972, petitioners filed a complaint in court seeking to repurchase the
property from said respondent under the provisions of Section 119 of Public Land Act 141 as
amended.

ISSUE:
WON it is necessary that the formal offer to redeem the land in question be accompanied by
a bona fide tender of the redemption price, or the repurchase price be consigned in Court, within
the period of redemption even if the right is exercised through the filing of a judicial action
RULING:No, bona fide tender of the redemption price or its equivalent consignation of said
price in court is not essential.
The formal offer to redeem, accompanied by a bona fide tender of the redemption price, within
the period of redemption prescribed by law, is only essential to preserve the right of redemption
for future enforcement beyond such period of redemption and within the period prescribed for
the action by the statute of limitations.
Where, as in the instant case, the right to redeem is exercised thru the filing of judicial action
within the period of redemption prescribed by the law, the formal offer to redeem, accompanied
by a bona fide tender of the redemption price, might be proper, but is not essential.
The filing of the action itself, within the period of redemption, is equivalent to a formal offer to
redeem. Any other construction, particularly with reference to redemption of homesteads
conveyed to third parties, would work hardships on the poor homesteaders who cannot be
expected to know the subtleties of the law, and would defeat the evident purpose of the Public
Land Law "to give the homesteader or patentee every chance to preserve for himself and his
family the land that the state granted him as a reward for his labor in cleaning and cultivating it."

109. G.R. No. 70623 June 30, 1987

ST.
DOMINIC
CORPORATION, petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, HON. RICARDO P. TENSUAN, RTC BRANCH
LXXXIII, QUEZON CITY FRANCISCA B. BUSTAMANTE, FLAVIANO BUSTAMANTE,
CARLOS ROBES, ADALIA FRANCISCO and AURORA FRANCISCO, respondents.
FACTS:
Sometime in 1961, the People's Homesite and Housing Corporation awarded the property in
question to one Cristobal Santiago, Jr., in whose favor a final deed of sale was executed and
Transfer Certificate of Title was issued.
Subsequently, the Robes spouses mortgaged the realty to the Manufacturer's Bank and Trust
Company. Thereafter, on February 2, 1968, Civil Case No. Q- 1 1895 was filed.Claiming legal
interest in the property, the Bustamante spouses were allowed to intervene in the case.
For failure of the Robes' spouses to pay the mortgage obligation, the Manufacturer's Bank and
Trust Company foreclosed the lot and caused the same to be sold at public auction.
The property was purchased by Aurora Francisco in whose favor a certificate of sale was
issued. No redemption of said property was effected.
Thus, the property in the name of the Robes spouseswas cancelled and was issued to Aurora
Francisco on the same date.
On April 20, 1976, Aurora Francisco applied for a writ of possession which was granted and
thereafter sold the property to petitioner, St. Dominic Corporation.

ISSUE:
he trial court's statement exempting from execution one not a party to the case nor privy to the
interests of the parties therein, from the effects of its pronouncements, cannot be considered an
amendment of its final and executory judgment in Civil Case No. Q- 1 1895.
RULING:
Anent the effect of the trial court's judgment on the mortgagee bank's rights and on the
foreclosure of the property in question, this Court has held that where a Torrens title was issued
as a result of regular land registration proceedings and was in the name of the mortgagor when
given as a security for a bank loan, the subsequent declaration of said title as null and void is
not a ground for nullifying the mortgage rights of the bank which had acted in good faith.
A mortgagee has the right to rely on what appears on the face of the certificate of title. In the
absence of anything to excite suspicion, it is under no obligation to look beyond the certificate
and investigate the title of the mortgagor appearing on the face of said certificate. There is no
showing in the records that the mortgagee bank was aware of any shadow affecting the title of
the mortgaged property when it was mortgaged. As will be explained later, the intervenors are

only prospective awardees of the disputed lot. They are not the owners. They have no title to
the land.
Any subsequent lien or encumbrance annotated at the back of the certificate of title cannot in
any way prejudice the mortgage previously registered and the lots subject thereto pass to the
purchaser at public auction free from any lien or encumbrance. Otherwise, the value of the
mortgage could be easily destroyed by a subsequent record of an adverse claim, for no one
would purchase at a foreclosure sale if found by the posterior claim. Aurora Francisco's title, as
a purchaser at the auction sale of the property in question, cannot be bound by the adverse
claims of the plaintiffs in Civil Case No. Q-11895. This is even more true with petitioner St.
Dominic Corporation which had acquired title from Aurora Francisco without any notice or flaw.
Upon proper foreclosure of a first mortgage, all liens subordinate to the mortgage are likewise
foreclosed. The foreclosure as well as the sale of the property were annotated on the title to the
property, then still in the name of Adalia Francisco and Carlos Robes. Such annotation serves
as constructive notice to the parties having any claim or nterest in the property to exercise their
right of redemption or to participate in the foreclosure sale. Certainly, there was an opportunity
for the claimants in Civil Case No. Q-1 1895 to acquire the property at issue. St. Dominic's rights
can no longer be disturbed.

110. G.R. No. L-67649 June 28, 1988

ENGRACIO
FRANCIA, petitioner,
vs.
INTERMEDIATE APPELLATE COURT and HO FERNANDEZ, respondents.
FACTS:
EngracioFrancia is the registered owner of a residential lot and a two-story house built upon it
situated in Pasay City, Metro Manila. On October 15, 1977, a 125 square meter portion of
Francia's property was expropriated by the Republic of the Philippines for the sum of P4,116.00
representing the estimated amount equivalent to the assessed value of the aforesaid portion.
Since 1963 up to 1977 inclusive, Francia failed to pay his real estate taxes. Thus, on December
5, 1977, his property was sold at public auction by the City Treasurer of Pasay City pursuant to
Section 73 of Presidential Decree No. 464 known as the Real Property Tax Code in order to
satisfy a tax delinquency of P2,400.00. Ho Fernandez was the highest bidder for the property.
Francia contends that his tax delinquency of P2,400.00 has been extinguished by legal
compensation. He claims that the government owed him P4,116.00 when a portion of his land
was expropriated on October 15, 1977. Hence, his tax obligation had been set-off by operation
of law as of October 15, 1977.
ISSUE:WON there is legal compensation to off-set Francias tax obligation to the government

RULING:No. There is no legal basis for the contention. By legal compensation, obligations of
persons, who in their own right are reciprocally debtors and creditors of each other, are

extinguished (Art. 1278, Civil Code). The circumstances of the case do not satisfy the
requirements provided by Article 1279, to wit:
(1) that each one of the obligors be bound principally and that he be at the same
time a principal creditor of the other;
xxx xxxxxx
(3) that the two debts be due.
xxx xxxxxx
This principal contention of the petitioner has no merit. We have consistently ruled that there
can be no off-setting of taxes against the claims that the taxpayer may have against the
government. A person cannot refuse to pay a tax on the ground that the government owes him
an amount equal to or greater than the tax being collected. The collection of a tax cannot await
the results of a lawsuit against the government.

111. [G.R. No. 138669. June 6, 2002]

STEVE TAN and MARCIANO TAN, petitioners, vs. FABIAN MENDEZ, JR., respondent.

FACTS:
Petitioners Steve Tan and Marciano Tan are the owners of Master Tours and Travel
Corporation and operators of Philippine Lawin Bus Co., Inc., while respondent Fabian Mendez,
Jr. is the owner of three gasoline stations in Iriga City, Ligao, Albay, and Sipocot, Camarines
Sur. Petitioners opened a credit line for their buses lubricants and fuel consumption with
respondent. At the same time, the latter was also designated by petitioners as the booking and
ticketing agent of Philippine Lawin Bus Co. in Iriga City.
Under such arrangement, petitioners drivers purchased on credit fuel and various oil
products for its buses through withdrawal slips issued by petitioners, with periodic payments to
respondent through the issuance of checks. On the other hand, respondent remitted the
proceeds of ticket sales to petitioners also through the issuance of checks. Sent together with
respondents remittance are the remittances of the ticket sales in the Baao Booking office, which
is managed separately and independently by another agent, Elias Bacsain.
Accordingly, petitioners issued several checks to respondent as payment for oil and fuel
products. Said check was dishonored by the bank upon presentment for payment for being
drawn against insufficient funds.
Respondent sent a demand letter to petitioners demanding that they make good the check
or pay the amount thereof, to no avail. Hence, an information for violation of the Bouncing
Checks Law was filed against petitioners

ISSUE:
Whether or not payment through compensation or offset can preclude prosecution for violation
of B.P. 22.

RULING:
No compensation can take place between petitioners and respondent as respondent is not
a debtor of petitioners insofar as the two checks representing collections from the Baao ticket
sales are concerned.Article 1278 of the Civil Coderequires, as a prerequisite for compensation,
that the parties be mutually and principally bound as creditors and debtors.If they were not
mutually creditors and debtors of each other, the law on compensation would not apply.In this
case, the memorandum shows that some unencashed checks returned to respondent to
allegedly offset the dishonored check were from the Baao ticket sales which are separate from
the ticket sales of respondent. Respondent only acted as an intermediary in remitting the Baao
ticket sales and, thus, is not a debtor of petitioners.
Interestingly, petitioners never alleged compensation when they received the demand letter,
during the preliminary investigation, or before trial by filing a motion to dismiss. Moreover, if
indeed there was payment by compensation, petitioners should have redeemed or taken the
checks back in the ordinary course of business.There is no evidence on record that they did so.

112. CARLOS vs. ABELARDO

GR No. 146504 April 9, 2002
Facts:
Honorio Carlos filed a petition against Manuel Abelardo, his son-in-law for recovery of
the $25,000 loan used to purchase a house and lot located at Paranaque. It was in
October 1989 when the petitioner issued a check worth as such to assist the spouses in
conducting their married life independently. The seller of the property acknowledged
receipt of the full payment. In July 1991, the petitioner inquired from spouses status of
the amount loaned from him, the spouses pleaded that they were not yet in position to
make a definite settlement. Thereafter, respondent expressed violent resistance to the
extent of making various death threats against petitioner. In 1994, petitioner made a
formal demand but the spouses failed to comply with the obligation. The spouses were
separated in fact for more than a year prior the filing of the complaint hence spouses
filed separate answers. Abelardo contended that the amount was never intended as a
loan but his share of income on contracts obtained by him in the construction firm and
that the petitoner could have easily deducted the debt from his share in the profits. RTC
decision was in favor of the petitioner, however CA reversed and set aside trial courts
decision for insufficiency of evidence. Evidently, there was a check issued worth
$25,000 paid to the owner of the Paranaque property which became the conjugal dwelling
of the spouses. The wife executed an instrument acknowledging the loan but Abelardo
did not sign.
ISSUE: WON a loan obtained to purchase the conjugal dwelling can be charged against
the conjugal partnership.

HELD:
Yes, as it has redounded to the benefit of the family. They did not deny that the same
served as their conjugal home thus benefiting the family. Hence, the spouses are jointly
and severally liable in the payment of the loan. Abelardos contention that it is not a loan
rather a profit share in the construction firm is untenable since there was no proof that
he was part of the stockholders that will entitle him to the profits and income of the
company.

113. SOLINAP VS. JUDGE DEL ROSARIO

July 25, 1983
Facts:
Spouses Tiburcio Lutero and Asuncion Magalona, owners of the Hacienda Tambal,
leased the said hacienda to petitioner Solinap for a period of 10 years for the rental of
P50,000.00 a year. It was further agreed that the sum of P25,000.00 should be paid by
Solinap to the PNB to amortize the indebtedness of the spouses Lutero. Lutero died on
1971. His heirs instituted the testate estate proceedings of the deceased, presided by
respondent Judge Amelia K. del Rosario. Respondent judge, issued an order, stating
"that in order to protect the estate, the administrator, Judge Nicolas Lutero, is hereby
authorized to scout among the testamentary heirs who is financially in a position to pay
all the unpaid obligations of the estate, including interest, with the right of subrogation in
accordance with existing laws." Juanito Lutero [grandson and heir of Tiburcio] and his
wife Hardivi R. Lutero paid the PNB the sum of P25,000.00 as partial settlement of the
deceased's obligations.
Issue:
Whether or not the defendants [Luteros] are indebted to the plaintiff and, if so, the
amount thereof
Held:
The argument fails to consider Article 1279 of the Civil Code which provides that
compensation can take place only if both obligations are liquidated. In the case at bar,
the petitioner's claim against the respondent Luteros in Civil Case No. 12379 is still
pending determination by the court. While it is not for Us to pass upon the merits of the
plaintiffs' cause of action in that case, it appears that the claim asserted therein is
disputed by the Luteros on both factual and legal grounds. More, the counterclaim
interposed by them, if ultimately found to be meritorious, can defeat petitioner's demand.

114. PEREZ VS. CA

GR. L-56101 Feb. 20, 1984

Facts:
CONGENERIC issued what was in effect a promissory note in the amount of P111,973.58
in favor of bearer No. 049, later identified as Ramon C. MOJICA, or an entity owned by
him. That promissory note, denominated hereinafter as Bill 1298, was to mature on
August 6, 1974. CONGENERIC issued another bearer promissory note for the sum of
P208,666.67, also in favor of MOJICA or an entity owned by him. The note, denominated
hereinafter as Bill 1419, was to mature on August 13, 1974. MEVER Films, Inc. the private
respondent herein, borrowed P500,000.00 from CONGENERIC, the former issuing in favor
of the latter a negotiable promissory note to mature on August 5, 1974. That note shall
hereinafter be referred to as NCI-0352. What may be stated in connection with the note is
that it had no provision for interest, except that, if not paid on due date, it would be
subject to interest at 14% per annum. CONGENERIC received P200,000.00 from petitioner
herein CORAZON and issued to her, as BEARER 209, a confirmation of sale (CS)
numbered 0366. Under the terms of CS-0366, CORAZON was to be paid P203,483.33 on
August 5, 1974, CONGENERIC would make collection on behalf of CORAZON; and ALL
OF CONGENERICS INTEREST IN NCI-0352 WAS BEING TRANSFERRED TO HER. Under
this last provision, CORAZON, subject to defenses, could have sued MEVER for payment
of the full amount of P500,000.00, specially if CONGENERIC should not object. It may
also be noted that while NCI-0352 was not subject to interest prior to August 5, 1974,
CONGENERIC obligated itself to pay CORAZON interest on August 5, 1974 in the amount
of P3,483.33, or roughly an interest rate of 19% per annum.

Issue:
Whether or not the compensation is proper
Held:
According to the Civil Code, Article 1279 In order that compensation may be proper, it is
necessary (1) That each one of the obligors be found principally, and that he be at the
same time a principal creditor of the other; (2) That both debts consist in a sum of
money, or if the things due are consumable, they be of the same kind, and also of the
same quality if the latter has been stated; (3) That the two debts be due; (4) That they be
liquidated and demandable; (5) That over neither of them there be any retention or
controversy, commenced by third persons and communicated in due time to the debtor.
We note that the xerox copies of Bill No. 1298 and Bill No. 1419 attached by MEVER to its
Brief do not contain the "roll-over" notations. However, MEVERs own exhibits before
respondent Appellate Court, Exhibits "3" and "3-A", do show those notations and MEVER
must be held bound by them.

115. STEVE TAN AND MARCIANO TAN VS. FABIAN MENDEZ, JR.
G.R. No. 138669. June 6, 2002

Facts:
Steve Tan and Marciano Tan are owners of Master Tours and Travel Corporation and
operators of Philippine Lawin Bus Co., Inc., while Fabian Mendez, Jr. is the owner of
three gasoline stations in Iriga City, Ligao, Albay, and Sipocot, Camarines Sur. The Tans
opened a credit line for their buses lubricants and fuel consumption with Mendez. At the
same time, the latter was also designated as the booking and ticketing agent of
Philippine Lawin Bus Co. in Iriga City.
Under such arrangement, the Tans drivers purchased on credit fuel and various oil
products for its buses through withdrawal slips issued, with periodic payments to
respondent through the issuance of checks. On the other hand, respondent remitted the
proceeds of ticket sales to petitioners also through the issuance of checks.
Accordingly, petitioners issued several checks as payment for oil and fuel products.
One of these is in the amount of P58,237.75, as payment for gasoline and oil products
procured during the period May 2 to 15, 1991. Said check was dishonored by the bank.
Mendez sent a demand letter demanding that they make good the check or pay the
amount thereof, to no avail. Hence, an information for violation of B.P. 22 was filed
against the Tans, upon the complaint of Mendez, before the RTC of Iriga City, Branch 37
Issue:
Whether or not petitioners can be held liable for violation of B.P. 22 or the Bouncing
Checks Law
Held:
The law enumerates the elements of B.P. Blg. 22 to be (1) the making, drawing, and
issuance of any check to apply for account or for value; (2) the knowledge of the maker,
drawer, or issuer that at the time of issue he does not have sufficient funds in or credit
with the drawee bank for the payment of the check in full upon its presentment; and (3)
the subsequent dishonor of the check by the drawee bank for insufficiency of funds or
credit or dishonor for the same reason had not the drawer, without any valid cause,
ordered the bank to stop payment. We find all the foregoing elements present in this
case.
The conviction of petitioners is sustained and it is deemed appropriate to modify the
penalties imposed. The penalty of imprisonment is deleted and in lieu thereof, imposed
upon petitioners a fine amounting to double the value of the subject check, with
subsidiary imprisonment in case of insolvency or non-payment.

116. ILOILO TRADERS FINANCE. INC. VS. HEIRS OF OSCAR SORIANO, JR.
404 SCRA 67 June 16, 2003
FACTS:
Respondents executed two promissory notes secured by real property mortgages in
favor of petitioner. The respondents defaulted and petitioner moved for extra-judicial
foreclosure of the mortgages. Respondent filed a complaint against petitioner. The
parties later entered into amicable settlement and submitted it to the trial court for
approval. The trial court required the parties to give some clarifications on several issues
that were not complied. The amicable settlement was disapproved and the court
proceeded. Respondents withdrew the case and filed a (new) case for novation and
specific performance which was decided favorably for the respondents. The Court of
Appeals affirmed the judgment.
ISSUE:
Whether or not the amicable settlement entered into between parties has novated the
original obligation
HELD:
No. The parties entered into the agreement basically to put an end to Civil Case No.
14007 then pending before the Regional Trial Court. Concededly, the provisions of the
settlement were beneficial to the respondent couple. The compromise extended the
terms of payment and implicitly deferred the extrajudicial foreclosure of the mortgaged
property. It was well to the interest of respondent spouses to ensure its judicial approval;
instead, they went to ignore the order of the trial court and virtually failed to make any
further appearance in court. This conduct on the part of respondent spouses gave
petitioner the correct impression that the Sorianos did not intend to be bound by the
compromise settlement, and its non-materialization negated the very purpose for which it
was executed

117. BOYSAW ET. AL., VS. INTERPHIL PROMOTIONS, ET. AL.

G.R. No. L-22590

March 20, 1987

Facts:
Boysaw and his then Manager, Ketchum, signed with Interphil Promotions, Inc.
represented by Sarreal, Sr., a contract to engage Gabriel "Flash" Elorde in a boxing
contest for the junior lightweight championship of the world. A supplemental agreement
not covered by thje principal contract was added. Boysaw fought and defeated Louis

Avila. Ketchum on his own behalf and on behalf of his associate Frank Ruskay, assigned
to J. Amado Araneta the managerial rights over Solomon Boysaw.
Araneta assigned to Yulo the managerial rights over Boysaw that he earlier acquired
from Ketchum and Ruskay. The next day, Boysaw wrote Lope Sarreal, Sr. informing him
of his arrival and presence in the Philippines.
Yulo, Jr. wrote to Sarreal informing him of his acquisition of the managerial rights over
Boysaw and indicating his and Boysaw's readiness to comply with the boxing contract.
On the same date, on behalf of Interphil Sarreal wrote a letter to the Games and
Amusement Board [GAB] expressing concern over reports that there had been a switch
of managers in the case of Boysaw, of which he had not been formally notified, and
requesting that Boysaw be called to an inquiry to clarify the situation
Issue:
Whether or not there was a violation of the fight contract
Held:Yes. On the issue pertaining to the violation of fight contract, the evidence
established that the contract was violated by appellant Boysaw himself when, without the
approval or consent of Interphil, he fought Louis Avila on June 19, 1961 in Las Vegas
Nevada. Appellant Yulo admitted this fact during the trial. While the contract imposed no
penalty for such violation, this does not grant any of the parties the unbridled liberty to
breach it with impunity.

118. TORRES ET. AL., VS. CA

G.R. No. 92540 December 11, 1992
Facts:
The contracts related to this case are ten parcels of land belonging to Flores that she
leased to the spouses Torres, for a specified term of four agricultural years commencing
from 1985 and at stipulated rentals payable in piculs of sugar. The parties agreed on their
renewal under the original terms, subject to the condition that the lessees would deliver
to Flores the amount of P50,000.00 not later than February 15, 1989. Flores said she
would need the money for her projected trip abroad. Flores claims that the petitioner
failed to comply with this condition and that consequently she informed them. In their
answer to the complaint, the petitioners submitted that the contracts had been validly
renewed because they had complied with the above-mentioned condition. They
contended that the lease had been continued under the rule of tacita reconduccion and
that the complainant was estopped from denying that she had granted them an option to
renew the contracts. After trial under the Rule on Summary Procedure, Judge Teopisto L.
Calumpang held that the contracts had not been validly renewed because the Torreses
had failed to deliver the amount of P50,000.00 in cash to Flores as promised.
Issue:

Whether or not the contract has been validly renewed

Held:
No. We begin by reiterating the familiar rule that the findings of fact of the lower courts
are binding on this Court unless they come within the specified exceptions, which are
also well-known. 7 None of such exceptions has been established in the case at bar. We
therefore accept that there was an oral agreement between the parties to extend the
original contracts of lease provided that the petitioners could deliver to the private
respondent the sum of P50,000.00 in cash not later than February 15, 1989. This was a
suspensive condition that was not met.

119. SSS VS. DEPARTMENT OF JUSTICE, ET. AL.

G.R. NO. 158131 August 8, 2007
Facts:
Jose V. Martel and Olga S. Martel are directors of Systems and Encoding Corporation
(SENCOR), an information technology firm, with respondent Jose V. Martel serving as
Chairman of the Board of Directors. SSS is a GOCC mandated by its charter, RA 1161, to
provide financial benefits to private sector employees. SENCOR is covered by RA 1161, as
amended by RA 8282, Section 22 of which requires employers like SENCOR to remit monthly
contributions to petitioner representing the share of the employer and its employees. In 1998,
SSS filed with the Pasay City Prosecutor's Office a complaint against Martels and their five coaccused for SENCOR's non-payment of contributions covering the period January 1991 to May
1997. To pay this amount, Martels offered to assign to petitioner a parcel of land in Tagaytay
City. SSS accepted the offer "subject to the condition that they will settle their obligation either
by way of dacion en pago or through cash settlement within a reasonable time. Thus, petitioner
withdrew its complaint but reserved its right to revive the same "in the event that no settlement
is arrived at." Jose V. Martel wrote petitioner offering, in lieu of the Tagaytay City property,
computer-related services. The record does not disclose petitioner's response to this new offer
but on 7 December 2001, petitioner filed another complaint against Martels and their five coaccused for SENCOR's non-remittance of contributions, this time from February 1991 to
October 2000.
Issue:
Whether or not the SSSs action to revive the complaint valid
Held:
Yes. The DOJ found that respondent Martels and petitioner entered into a compromise
agreement before the filing of the Information in Criminal Case No. 01-0517 and that such
"negated" any criminal liability on respondent Martels' part.

120. CRUZ VS. GANGAN 443 Phil 856 (2003)

**CANT FIND THE CASE**

121. GANZON VS. JUDGE SANCHO

G.R. No. L-56450 July 25, 1983
Facts:
Ganzon initiated proceedings to extra-judicially foreclose a real estate mortgage
executed by the private respondents in his favor. The Deed of Real Estate Mortgage
executed on March 19, 1979 between Randolph Tajanlangit and Esteban Tajanlangit as
mortgagors on one hand and Ganzon as mortgagee on the other hand was to secure the
payment by the Tajanlangits of a promissory note amounting to P40,000.00 in favor of
Ganzon. The mortgage covered a parcel of residential land, located in the District of
Molo, Iloilo City. Lira, in his capacity as ex-oficio provincial sheriff of Iloilo served
personal notice of the foreclosure proceedings on the private respondents. Lira also
caused the publication in a newspaper of general circulation in the City and Province of
Iloilo of a Notice of Extra Judicial Sale of Mortgaged Property, setting the sale at public
auction of the mortgaged property at 10:00 a.m. on September 28, 1979, at his office at
the Provincial Capitol, Iloilo City. On September 27, 1979, a day before the scheduled
public auction, the private respondents filed a civil action for specific performance,
damages, and prohibition with preliminary injunction against the petitioners with the
respondent court.

Issue:
Whether or not mortgage is an accessory contract
Held:
Yes. A mortgage is but an accessory contract. "The consideration of the mortgage is the
same consideration of the principal contract without which it cannot exist as an
independent contract."

122. TEOFISTO GUINGONA, JR. VS. CITY FISCAL OF MANILA

April 4, 1984
Facts:
From March 1979 to March 1981, Clement David made several investments with the
National Savings and Loan Association. On March 21, 1981, the bank was placed under
receivership by the Bangko Sentral. Upon Davids request, petitioners Guingona and
Martin issued a joint promissory note, absorbing the obligations of the bank. On July 17,
1981, they divided the indebtedness. David filed a complaint for estafa and violation of
Central Bank Circular No. 364 and related regulations regarding foreign exchange
transactions before the Office of the City Fiscal of Manila. Petitioners filed the herein
petition for prohibition and injunction with a prayer for immediate issuance of restraining
order and/or writ of preliminary injunction to enjoin the public respondents to proceed
with the preliminary investigation on the ground that the petitioners obligation is civil in

nature.
Issue:
Whether there was a violation of Central Bank Circular No. 364
Held:
Petitioner Guingona merely accommodated the request of the Nation Savings and loan
Association in order to clear the bank draft through his dollar account because the bank
did not have a dollar account. Immediately after the bank draft was cleared, petitioner
Guingona authorized Nation Savings and Loan Association to withdraw the same in
order to be utilized by the bank for its operations. It is safe to assume that the U.S.
dollars were converted first into Philippine pesos before they were accepted and
deposited in Nation Savings and Loan Association, because the bank is presumed to
have followed the ordinary course of the business which is to accept deposits in
Philippine currency only, and that the transaction was regular and fair, in the absence of
a clear and convincing evidence to the contrary.

123. G.R. No. L-46405 June 30, 1986

LA
CAMPANA
FOOD
PRODUCTS,
INC., petitioner-appellant,
vs.
PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, and L.F. VILLASEOR, in his capacity
as City Sheriff of Quezon City, respondents-appellees.
FACTS: Petitioner had a credit line with respondent PCIB secured by two real estate mortgages
wherein petitioner negotiated a loan with Intercontinental Monetary Corporation to be
guaranteed by the DBP and agreed to guarantee petitioner's foreign loan subject to the
condition that petitioner should deposit with it the proceeds of the loan which should be made
available for payment of petitioner's obligation to local financial institutions and to serve as
working capital. DBP registered its mortgage on petitioner's titles and there was no further
payment on petitioner's outstanding obligations with PCIB was made either by DBP or by
petitioner itself. PCIB instituted foreclosure proceedings on the real estate mortgages executed
by petitioner in its favor. Auction sale was set on petitioner's properties but petitioner filed the
Petition for Certiorari, Mandamus, Prohibition with Preliminary Injunction with the lower Court
and it was given due course and issued a TRO enjoining the sheriff from proceeding with the
auction sale. PCIB, on the other hand, maintains that petitioner's obligations with it still subsist
as the same was not assumed by DBP. Opposing the issuance of a Writ of Preliminary
Injunction, PCIB alleged that since there has been no full payment of petitioner's obligations no
release of the mortgage executed by petitioner in its favor has been made. With respect to the
Statement of Accounts, PCIB claimed that it was merely intended to show that petitioner's
account had been transferred from its Dasmarias Branch to its Legal Department for proper
action and not as evidence of extinguishment of obligation.
ISSUE: Whether or not there was a novation due to substitution the person of the debtor
HELD: No. We agree with respondent-appellee's contention that there was no novation. DBP
did not substitute petitioner-appellant as debtor to respondent-appellee. It merely agreed to
guarantee petitioner's foreign loan subject to the condition that petitioner should deposit with it
the proceeds of the loan which should be made available for payment of petitioner's obligation

to local financial institutions and to serve as working capital. The DBP guarantee was to be
secured by a first mortgage on the assets then mortgaged to DBP and the assets offered as
additional securities, which included the parcels of land mortgaged to petitioner. Consequently,
DBP requested respondent bank to lend Transfer Certificates of Title Nos. 24402 and 24403
covering the parcels of land mortgaged to respondent bank by petitioner for DBP to be able to
register its mortgage thereon. Respondent bank agreed to the registration of DBP's second
mortgage and to cancel or release its first mortgage upon receipt in full of the payment of
petitioner's mortgage debt.Inasmuch as only the sum of P140,000.00 was remitted by DBP to
respondent bank representing partial payment of petitioner's outstanding obligation of
P526,632.67, the first mortgage of respondent bank was not cancelled or released and the
mortgage of DBP remained a second mortgage. Clearly, then, respondent bank had the right to
institute foreclosure proceedings on its first mortgage in view of the non-payment of the balance
of the mortgage debt.

124.G.R. No. 74623 August 31, 1987

BISAYA LAND TRANSPORTATION CO., INC., ANTONIO V. CUENCO and BENJAMIN G.
ROA, petitioners,
vs.
MARCIANO
C.
SANCHEZ
AND
THE
HON.
INTERMEDIATE
APPELLATE
COURT, respondents.
FACTS: Petitioner Bisaya Land Transportation Company, Inc. has been engaged in the
shipping business, operating several passenger-cargo vessels, and among the ports of call of
these vessels has been Butuan City. Sanchez was an employee of BISTRANCO appointed as
shipping agent. A formal Contract of Agency was executed between BISTRANCO, represented
by Receiver Atty. Amor and Sanchez, represented by his authorized representative Aranas but
he found out that the Contract of agency was quite prejudicial to him, he executed with
BISTRANCO a Supplemental Shipping Agency Contract which was duly signed by Receiver
Atty. Amor on behalf of BISTRANCO and Sanchez himself. But, both the Contract of Agency
and the Supplemental Shipping Agency Contract were never submitted by Atty. Adolfo Amor to
the receivership court for its approval. For years, he established good business relations with
the business community of Butuan City. Sanchez succeeded in increasing the volume of the
shipping business of BISTRANCO at the Butuan City port, so much so that his earnings on
freight alone increased. While the shipping business of BISTRANCO in Butuan City flourished,
co-petitioner Roa, as wrote Sanchez a letter advising him that BISTRANCO would commence
operating its branch office in Butuan City. Prior to this, Sanchez was invited to attend a meeting
of the Board of Directors of BISTRANCO wherein he was told by co-petitioner Cuenco that the
Board was to open a branch office in Butuan City and he was asked what would be his
proposals. Sanchez submitted his proposals in writing, but these were not acceptable to
BISTRANCO. Realizing that the letter was in effect a repudiation of the Contracts, Sanchez filed
an action for specific performance with preliminary injunction and damages with the Regional
Trial Court of Cebu City and is granted in his favor.
ISSUE: whether or not there was novation as to the agreement of the parties changing their
object or principal obligations
HELD: No. Novation is not equivalent or synonymous to mere alteration, modification or
amendment. Novation is the substitution of a new obligation for an existing or old one, which is

thereby extinguished. Novation takes place when the object or principal condition of an
obligation is changed or altered. Novation is never presumed; it must be explicitly stated or
there must be a manifest incompatibility between the old and the new obligations in every
aspect. The test of incompatibility between two obligations or contracts, is whether or not they
can stand together, each one having an independent existence. If they cannot, they are
incompatible, and the later obligation novates the first. In the case at bar, it can be deduced that
the Agreements were not meant to novate the herein questioned contracts. Rather, the intent of
the parties was to suspend some of the provisions of the Contracts for a period of one (1) year,
during which, the provisions of the Agreements will prevail. Besides, the changes were not
really substantial to bring about a novation. The changes pointed out by BISTRANCO between
the Contracts and the Agreements do not go into the essence of the cause or object of the
former. Considering that the contract of agency and the supplemental shipping agency contract
are valid and binding between BISTRANCO and Sanchez, the former's opening of a branch in
Butuan City was, in effect, a violation of the Contracts. Sanchez entered into the agency
Contract because of the expected income and profits for himself.
125.

G.R. No. 110207. July 11, 1996 Reyes vs CA

FACTS: A Deed of Extrajudicial Partition and Settlement was allegedly entered into
between petitioner Florentino and his sisters. The subject of the alleged partition was a parcel of
land located in Bangkal, Makati and was registered in the name of Bernardino Reyes, the father
of petitioner and private respondents. Sometime, private respondents, having discovered the
registration of the said Deed denied having knowledge of its execution and disclaimed having
signed the same; nor did they ever waive their rights, shares and interest in the subject parcel of
land. According to private respondents, subject Deed was fraudulently prepared by petitioner
and that their signatures thereon were forged. They also assert that one Atty. Jose Villena, the
Notary Public who notarized the said Deed was not even registered in the list of accredited
Notaries Public of Pasay City. After the property was partitioned, petitioner, his children and
private respondent Paula Palmenco allegedly executed a Deed of Co-owners' Partition dividing
the property among themselves. Private respondents filed a Complaint for "Annulment of Sale
and Damages With Prayer for Preliminary Injunction/Restraining Order" before the Makati RTC
against petitioner and the Register of Deeds of Makati to declare the title null and void and
rendered judgment in favor of the private respondents. The petition was raised to the Court of
Appeals but affirmed the decision of the lower court.
ISSUE: Is there a novation when there is clearly no agreement to release the debtor from the
responsibility
HELD: No. The mere circumstance of the creditor receiving payments from a third party
who acquiesced to assume the obligation of the debtor when there is clearly no agreement to
release the debtor from the responsibility does not constitute novation. Petitioners cannot justify
their ownership and possession of the subject parcel of land since they could not meet the
requisites provided by the provisions they have cited. Regarding the requirement of good faith,
the first paragraph of Article 526 states,"He is deemed a possessor in good faith who is not
aware that there exists in his title or mode of acquisition any flaw which invalidates it." From the
cited provision, petitioners could not have been possessors in good faith of the subject parcel of
land considering the finding that at the very inception they forged the Deed of Extrajudicial
Partition and Settlement which they claim to be the basis for their just title. Having forged the
Deed and simulated the signatures of private respondents, petitioners, in fact, are in bad
faith. The forged Deed containing private respondents' simulated signatures is a nullity and
cannot serve as a just title. Moreover, this Court agrees with the private respondents that there
can be no acquisitive prescription considering that the parcel of land in dispute is titled property,

i.e., titled in the name of the late Bernardino Reyes, the father of both petitioner Florentino and
the private respondents.[14] This fact, petitioners do not deny.[15] Hence, even if they allege
adverse possession that should ripen into ownership due to acquisitive prescription, their title
cannot defeat the real rights of private respondents who stepped into the shoes, as it were, of
their father as successors-in-interest. As it is, petitioners cannot even claim adverse possession
as they admit that the private respondents likewise resided and continue to reside on the
subject property.

126. G.R. Nos. 147933-34. December 12, 2001

PUBLIC ESTATES AUTHORITY, petitioner, vs. ELPIDIO S. UY, doing business under the
name and style EDISON DEVELOPMENT & CONSTRUCTION, AND THE COURT OF
APPEALS, respondents.
FACTS: Petitioner is the government agency tasked by the Bases Conversion Development
Authority to develop the Heritage Park, petitioner executed with respondent Elpidio S. Uy, doing
business under the name and style Edison Development & Construction, a Landscaping and
Construction Agreement, whereby respondent undertook to perform all landscaping works. The
Agreement stipulated that the completion date for the landscaping job was within 450 days,
commencing within 14 days after receipt by respondent from petitioner of a written notice to
proceed. Due to delays, the contracted period was extended to 693 days. Among the causes
of the delay was petitioners inability to deliver to respondent 45 hectares of the property for
landscaping, because of the existence of squatters and a public cemetery. Respondent
instituted with the Construction Industry Arbitration Commission an action, seeking to collect
from petitioner damages arising from its delay in the delivery of the entire property for
landscaping.
ISSUE: Whether or not the petitioners liability to respondent has been extinguished by novation
HELD: Petitioners argument that its liability to respondent has been extinguished by novation
when it assigned and turned over all its contracted works at the Heritage Park to the heritage
Park Management Corporation. This, however, cannot bind respondent, who was not a party to
the assignment. Moreover, it has not been shown that respondent gave his consent to the turnover. Article 1293 of the Civil Code expressly provides: Novation which consists in substituting
a new debtor in the place of the original one, may be made even without the knowledge or
against the will of the latter, but not without the consent of the creditor. Payment by the new
debtor gives him the rights mentioned in articles 1236 and 1237.
127. G.R. No. L-44748 August 29, 1986
RADIO
COMMUNICATIONS
OF
THE
PHILS.,
vs.
COURT OF APPEALS and LORETO DIONELA, respondents.

INC.

(RCPI). petitioner,

FACTS: The private respondent received a telegram sent by the petitioner with defamatory
words on and wounded his feelings, also caused him undue embarrassment and affected
adversely his business as well because other people have come to know of said defamatory
words. Defendant corporation as a defense, alleges that the additional words in Tagalog was a
private joke between the sending and receiving operators and that they were not addressed to
or intended for plaintiff and therefore did not form part of the telegram and that the Tagalog
words are not defamatory. Nobody other than the operator manned the teletype machine which
automatically receives telegrams being transmitted. The said telegram was detached from the

machine and placed inside a sealed envelope and delivered to plaintiff, obviously as is. The
additional words in Tagalog were never noticed and were included in the telegram when
delivered.
ISSUE: whether or not there was a breach of contract between the parties
HELD: Yes,petitioner is a domestic corporation engaged in the business of receiving and
transmitting messages. Everytime a person transmits a message through the facilities of the
petitioner, a contract is entered into. Upon receipt of the rate or fee fixed, the petitioner
undertakes to transmit the message accurately. There is no question that in the case at bar,
libelous matters were included in the message transmitted, without the consent or knowledge of
the sender. There is a clear case of breach of contract by the petitioner in adding extraneous
and libelous matters in the message sent to the private respondent. As a corporation, the
petitioner can act only through its employees. Hence the acts of its employees in receiving and
transmitting messages are the acts of the petitioner. To hold that the petitioner is not liable
directly for the acts of its employees in the pursuit of petitioner's business is to deprive the
general public availing of the services of the petitioner of an effective and adequate remedy. In
most cases, negligence must be proved in order that plaintiff may recover. However, since
negligence may be hard to substantiate in some cases, we may apply the doctrine of RES IPSA
LOQUITUR (the thing speaks for itself), by considering the presence of facts or circumstances
surrounding the injury.
128. G.R. No. L-24856 November 14, 1986
NATIONAL
POWER
vs.
EIN CHEMICAL CORPORATION and
CO., defendants-appellee

CORPORATION, plaintiff-appellant,
PHILIPPINE

INTERNATIONAL

SURETY

FACTS: NAPOCOR after public bidding, awarded to the EIN the contract formalized to supply
and deliver 3,691 long tons of crude sulfur in one shipment to the Maria Cristina Fertilizer Plant
in Iligan City EIN obtained from the NPC a letter of credit with PNB. Anticipating failure to deliver
on the contract date, EIN requested and was granted by NPC a further extension of the expiry
date of the letter of credit. EIN delivered only 1,000 long tons of crude sulfur ostensibly due to
lack of bottoms; but was paid therefor by NPC the amount of P101,764.05. Even though it failed
to deliver as per contract, EIN requested to be allowed to participate in another bidding to be
conducted by NPC but the latter disqualified EIN from participating in the said bidding. The NPC
instead sued EIN for damages for breach of contract.The lower court dismissed the case
declaring that EIN was not in bad faith; that, the extension of the expiry date of the letter of
credit carried with it the extension of the delivery time; that before it became the duty of EIN to
deliver, the NPC should first open the letter of credit notwithstanding the fixed delivery date; that
NPC was unjustified in disqualifying EIN from bidding for the next contract; and, that there was
scarcity of bottoms when the expiry date of the letter of credit was extended.The NPC appealed
the trial court's decision questioning all the foregoing points.
ISSUE: Whether or not EIN committed a breach of contract which would entitle NPC to
damages
HELD: Yes, a review of the records shows that the contract was freely entered into by both
parties in good faith. The provisions of the contract, however, indicate that there is no
relationship between the delivery date and the opening of the letter of credit which was anyway

opened within a reasonable time after the signing of the contract. The extensions of the expiry
dates of the letter of credit cannot, by any means, be interpreted as extensions of the delivery
date. If this was the intention of the parties, then a corresponding date or deadline could have
been provided. As the terms show, no other delivery date can even be inferred. The claim that
the intention of the parties for the EIN to ship the goods upon notice of the opening of the letter
of credit is without merit. The imputation of malicious delay on the part of NPC is groundless,
there being no proof to that effect. On the contrary, NPC has been very lenient by extending the
expiry date of the letter of credit thrice despite the failure of EIN to fully deliver on the contract.
The problem of bottoms is one that is well-known and anticipated by suppliers and shippers,
and NPC cannot be faulted for such problem since it opened the letter of credit within a
reasonable time after the signing of the contract. The NPC, in fact, had no duty to inform EIN of
-the shipping time between the US Atlantic ports and the Philippines since all shippers and
suppliers are presumed to know this as part of their business. Evidently, the EIN clearly
committed a breach of contract by failing to completely deliver on its contract inspite of the
leniency of the NPC in enforcing its rights. Laxity of a contracting party in the enforcement of its
rights under the contract does not in any manner diminish its rights thereunder.

129.G.R. No. L-61898 August 9, 1985

LAO
SOK, petitioner
vs.
LYDIA SABAYSABAY, AMPARO MANGULAT, ROSITA SALVIEJO, NENITA RUINATA, VILMA
CAPILLO,
VIRGINIA
SANORJO
and
THE
NATIONAL
LABOR
RELATIONS
COMMISSION, respondents.
FACTS: Petitioner Lao Sok owned and operated the Shelton Department Store located at
Carriedo Street, Quiapo, Manila. Private respondents were all salesladies of the department
store with a daily wage of P14.00 each. Sometime, petitioner's store was razed by fire. He did
not report the loss of jobs of the salesladies which resulted from the burning of his department
store to the Regional Office of the Ministry of Labor. Petitioner promised the private respondents
that he would transfer them to his other department stores. Several weeks passed but petitioner
still did not fulfill his promise. The petitioner, however, told the respondents that he would give
them their separation pay and other benefits due them as soon as he collected the insurance
proceeds arising from his burned store. The private respondents accepted this offer of the
petitioner. Petitioner later collected the proceeds of his insurance but he did not give the private
respondents their separation pay and other benefits. Neither did he employ them in his other
stores as earlier promised. Later on, the private respondents filed a complaint with the Ministry
of Labor and Employment charging the petitioner with illegal dismissal and non-payment of their
separation pay, allowance and incentive leave pay and rendered in favor of the complainants.
ISSUE: whether or not there was a valid contract wherein petitioner is bound to comply with his
contractual obligation
HELD: Yes, respondent NLRC, therefore, acted properly in ordering petitioner to give private
respondents their separation pay as he was bound to comply with his contractual obligation
which is the law between the parties. It was in reality not a mere 'promise' as petitioner terms it
but a contract, because all the essential requisites of a valid contract are present, to wit: (1)
consent was freely given by the parties, (2) there was a subject matter, which is the payment of
the separation pay of private respondents, and (3) a cause, which is the loss of job of private

respondents who had been petitioner's salesladies for several years. Lao Sok made an offer
which was duly accepted by the private respondents. There was, therefore, a meeting of the
minds between two parties whereby one bound himself with respect to the other, to give
something or to render some service (Article 1305, Civil Code). By the unconditional acceptance
of the offer that they would be paid separation pay, a contract was therefore perfected.
Contracts in whatever form they may have been entered into are binding on the parties unless
form is essential for the validity and enforceability of that particular contract.

130. G.R. No. L-42283 March 18, 1985

BUENAVENTURA
ANGELES,
ET
vs.
URSULA TORRES CALASANZ, ET AL., defendants-appellants.

AL., plaintiffs-appellees,

FACTS: The two parties here entered into a contract to sell a piece of land located in Cainta,
Rizal for the amount of P3,920.00 plus 7% interest per annum. The plaintiffs-appellees made a
downpayment of P392.00 upon the execution of the contract. On numerous occasions, the
defendants-appellants accepted and received delayed installment payments from the plaintiffsappellees. Sometime, the defendants-appellants wrote the plaintiffs-appellees a letter
requesting the remittance of past due accounts and thereafter cancelled the said contract
because the plaintiffs-appellees failed to meet subsequent payments. The plaintiffs-appellees
filed a suit to compel the defendants-appellants to execute in their favor the final deed of sale
because they found out that they have already paid the total amount of P4,533.38 including
interests, realty taxes and incidental expenses for the registration and transfer of the land.
However, the defendants-appellants alleged that the plaintiffs-appellees violated paragraph six
(6) of the contract to sell when they failed and refused to pay and/or offer to pay the monthly
installments, thereby constraining the defendants-appellants to cancel the said contract. The
lower court rendered judgment in favor of the plaintiffs-appellees.
ISSUE: Whether or not the parties in this case contracted a contact of adhesion
HELD: Yes.The contract to sell entered into by the parties has some characteristics of a
contract of adhesion. The defendants-appellants drafted and prepared the contract. The
plaintiffs-appellees, eager to acquire a lot upon which they could build a home, affixed their
signatures and assented to the terms and conditions of the contract. They had no opportunity to
question nor change any of the terms of the agreement. It was offered to them on a "take it or
leave it" basis. While it is true that paragraph 2 of the contract obligated the plaintiffs-appellees
to pay the defendants-appellants the sum of P3,920.00 plus 7% interest per annum, it is
likewise true that under paragraph 12 the seller is obligated to transfer the title to the buyer upon
payment of the P3,920.00 price sale. The contract to sell, being a contract of adhesion, must be
construed against the party causing it. We agree with the observation of the plaintiffs-appellees
to the effect that "the terms of a contract must be interpreted against the party who drafted the
same, especially where such interpretation will help effect justice to buyers who, after having
invested a big amount of money, are now sought to be deprived of the same thru the prayed
application of a contract clever in its phraseology, condemnable in its lopsidedness and injurious
in its effect which, in essence, and in its entirety is most unfair to the buyers."
131. G.R. No. L-68111 December 20, 1988
BERNOLI
P.
vs.

ARQUERO, petitioner,

HONORABLE NAPOLEON J. FLOJO, Presiding Judge, Branch VI, Regional Trial Court,
Second Judicial Region, Aparri, Cagayan and RADIO COMMUNICATION OF THE
PHILIPPINES (RCPI), respondents.
FACTS: The petitioner and private respondent Radio Communications of the Philippines, Inc.
(RCPI), entered into a contract for services for the transmission of a telegraphic message thru
RCPI to Atty. Eleazar S. Calasan at his office address. The text of the telegram contract form for
transmission Atty. Calasan received a copy of the telegram the next day but he was made to
pay the sum of P 7.30 for delivery charges. Thereafter, at the birthday party of Asst. Fiscal
Bonifacio Sison, Atty. Calasan confronted and censured the petitioner anent the said telegram.
Despite the petitioner's explanation that the telegram had been duly paid for he was branded as
a "stingy mayor who cannot even afford to pay the measely sum of P 7.30 for the telegram in
the presence of many persons.Thus, the petitioner filed an action for damages against RCPI
before the RTC,then RCPI filed a motion to dismiss on the ground of improper venue,
contending that pursuant to the service contract, the parties had agreed that the venue of any
action which may arise out of the transmittal of the telegram shall be in the courts of Quezon
City alone.
ISSUE: Whether or not the agreement of the parties in this case as to venue is contrary to law,
public order, public policy, morals or good customs
HELD: No. The parties do not dispute that in the written contract sued upon, it was expressly
stipulated that any action relative to the transmittal of the telegram against the RCPI must be
brought in the Courts of Quezon City alone. We note that neither party to the contract reserved
the right to choose the venue of action as fixed by law (i.e., where the plaintiff or defendant
resides, at the election of the plaintiff [par. 'b'], Section 2, Rule 4, Revised Rules of Court), as is
usually done if the parties purported to retain that right of election granted by the Rules. Such
being the case, it can reasonably be inferred that the parties intended to definitely fix the venue
of action, in connection with the written contract sued upon, in the courts of Quezon City only.
Section 3, Rule 4, Revised Rules of Court sanctions such stipulation by providing that "by
written agreement of the parties the venue of action may be changed or transferred from one
province to another." In the instant case, the condition with respect to venue in the telegram
form for transmission was printed clearly in the upper front portion of the form. Considering the
petitioner's educational attainment (being a lawyer by profession and the Municipal Mayor of
Sta. Teresita, Cagayan), he must be charged with notice of the condition limiting the venue to
Quezon City, and by affixing his signature thereon, he signified his assent thereto.

132. G.R. No. 131086. December 14, 2001

BPI EXPRESS CARD CORPORATION, petitioner, vs. EDDIE C. OLALIA, respondent.
FACTS: Respondent Eddie C. Olalia applied for and was granted membership and credit
accommodation with BECC. It was renewed in the name of Cristina G. Olalia, respondents exwife. This second card was an extension of Olalias credit card. BECC alleges that the
extension card was delivered and received by Olalia at the same time as the renewal card.
However, Olalia denies ever having applied for, much less receiving, the extension card. As
evidenced by charge slips presented and identified in court, it was found that the extension card
in the name of Cristina G. Olalia was used for purchases with a total unpaid charges from the
use of this card amounted to P101,844.54. BECC sent a demand letter to Olalia, to which the
latter denied liability saying that said purchases were not made under his own credit card and

that he did not apply for nor receive the extension card in the name of his wife. He has likewise
not used or allowed anybody in his family to receive or use the extension card. Moreover, his
wife, from whom he was already divorced, left for the States in 1986 and has since resided
there. In addition, neither he nor Cristina was in Bacolod or Iloilo at the time the questioned
purchases were made. She was dropped as defendant by the trial court wherein a case for
collection was filed by BECC before the RTC but Olalia only admits responsibility for the amount
of P13,883.27, representing purchases made under his own credit card.

ISSUE: Whether or not there was a valid contract wherein the parties entered into
HELD: BECC supports its allegation that Eddie C. Olalia received the extension card in the
name of his wife, by presenting the Renewal Card Acknowledgement Receipt wherein Olalia
affixed his signature. Such will not suffice to prove to this Court that the requirements for the
issuance of the extension card have been complied with, especially in the face of respondents
firm denial. We have previously held that contracts of this nature are contracts of adhesion, socalled because their terms are prepared by only one party while the other merely affixes his
signature signifying his adhesion thereto. As such, their terms are construed strictly against the
party who drafted it.In this case, it was BECC who made the foregoing stipulation, thus, they are
now tasked to show vigilance for its compliance. BECC failed to explain why a card was issued
without accomplishment of the requirements. Moreover, BECC did not even secure the
specimen signature of the purported extension cardholder, such that it cannot now counter
Eddie C. Olalias contention that the signatures appearing on the charge slips of the questioned
transactions were not that of his former wife, Cristina G. Olalia. We note too that respondent
Eddie C. Olalia did not indicate nor declare that he had a spouse when he applied for a credit
card with BECC. In fact, at the time the extension card was issued and allegedly received by
respondent, Cristina had long left the Philippines. BECCs negligence absolves respondent
Olalia from liability.

133.BALIWAG TRANSIT INC. VS CA JANUARY 31,1981

134.ADORACION Y CRUZ ET AL VS CA JULY 27,1998

135. G.R. No. 139114

October 23, 2001

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. ROMAN LACAP Y CAILLES, accusedappellant.

FACTS: The accused was a shabu-supplier and a former military officer was apprehended by
the NBI Agents in a buy-bust operation conducted by the latter. The lower court convicted the
accused. During the buy-bust operation, although the money was already in the place where the
buy-bust operation happened, he was not able to accept the payment for the shabu being sold

by the NBI Agent who was the poseur-buyer. In his appeal, he contended that the there was no
actual delivery of the drug to the poseur-buyer, and that he should be acquitted because the
crime was not established because of the absence of the delivery of the thing sold and payment
therefor (as one of the 2 elements necessary for the prosecution of the crime of illegal sale of
shabu under Sec. 15, Art. III of R.A. 9264 as amended by Sec. 20, Art IV of RA 7659).
ISSUE: Whether or not there should be a complete actual delivery of the thing sold as well as
actual handling down of money to the seller as in the contention of the accused

RULING: No. Although the accused-appellant did not actually hand the contraband to Doloiras,
he placed it on top of the vault where Doloiras could easily have gotten it after paying accusedappellant. There was thus a constructive delivery of the drug. The fact that accused-appellant
tried to put the shabu back inside the vault is of no moment as the crime had by then been
already consummated. There is no rule which requires that in buy-bust operations there must be
a simultaneous exchange of the money and the drug between the poseur-buyer and the pusher.
Nor was it important that the "boodle" money was not presented in court. What is material to the
prosecution of the illegal sale of dangerous drugs is proof that the transaction actually took
place, coupled with the presentation in court of the corpus delicti.

136. BATAAN SEEDLING ASSOCIATION, INC. and CARLOS VALENCIA, petitioners, vs.
REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF ENVIRONMENT
and NATURAL RESOURCES, respondent
G.R. No. 141009

July 2, 2002

FACTS: Petitioner Bataan Seedling Association, Inc. (BSAI) entered into a Community Based
Reforestation Contract on October 26, 1990 with the Republic of the Philippines, represented by
the DENR. Under said contract, BSAI, in consideration of the amount of P975,126.61, bound
itself to undertake the reforestation of a fifty-hectare open/denuded forest land in Barangay
Liyang, Pilar, Bataan within a period of three (3) years. BSAI likewise undertook to report to the
DENR any event or condition which delays or may delay or prevent completion of the work, and
submit progress billings and accomplishment reports. Concomitant with the contract is the
Project Development Plan and the Approved Schedule of Progress Payments detailing the
annual cash flow and schedule of activities within the three-year period, and the Contract of
Undertaking providing for the mobilization fund in the amount of P75,054.66. Said fund was

allotted and released by respondent to enable BSAI to start with the project, but the fund was to
be returned to respondent upon completion of the project or deducted from the periodic release
of moneys to petitioners.
Believing that petitioners failed to comply with their obligations under the contract, respondent
sent a notice of cancellation dated July 31, 1992 to petitioner Carlos Valencia, President of
BSAI, asking the latter to show cause why the contract should not be terminated.

Due to their failure to respond to the notice of cancellation, as well as return the mobilization
fund, respondent filed a Complaint for Damages against petitioners.

ISSUE: Whether the unilateral cancellation by the respondent of the Community-Based

Reforestation Contract is valid, being without factual and legal basis

RULING: Yes. There was a material breach of the contract warranting its cancellation. The
breach was not merely a slight or casual breach, but a substantial one giving sanction to the
cancellation. Under Clause 4.1 of the contract, respondents "shall have the right to suspend,
terminate or cancel" the contract upon petitioners substantial failure to fulfill their obligations, or
a willful violation of the material conditions, stipulations, and covenants thereof. It can be
concluded from the tenor of said clause that the parties intended mandatory compliance with all
the provisions of the contract. As stated previously, among such provisions requiring strict
adherence are the submission of progress reports and the reporting of such event which may
delay or prevent the project. Hence, upon petitioners failure to comply with said obligations,
respondent was well within its right to cancel the contract by express grant of Clause 4.1.

137. CLARITA V. TANKIANG SANCHEZ, BEATRIZ V. TANKIANG, ANTONIO V. TANKIANG,

FRANCISCO V. TANKIANG, SYLVIA TANKIANG MANALO, ROSALINA V. TANKIANG,
EDILBERTO V. TANKIANG, VICENTE V. TANKIANG, and ROMEO V. TANKIANG, as heirs
of LUISA VILLARICA TANKIANG, petitioners, vs. THE HONORABLE COURT OF APPEALS
and PEDRO CRISTOBAL, respondents.
G.R. No. L-62275 June 22, 1984

FACTS: The petitioners are the owners of the fishpond being questioned in this case. In 1968,
the fishpond was given out in a civil law lease to Alfredo Villarica. Private respondent Cristobal
was in the employ of Villarica since 1968, and upon the termination of the lease on August 30,
1980, Cristobal refused to surrender his alleged tenant status contending that despite the
expiration of the civil law lease contract between his employer (Villarica) and the original owner

(the mother of the petitioners herein) on the said fishpond, he is entitled to the continuous
possession thereof as "bantay-kasama".

He then, instituted an action before the then Court of Agrarian Relations against the petitioner
contending that he is entitled for security of tenure. The mentioned court ruled in favor of the
private respondent which was affirmed by the CA. Hence this petition

ISSUE: Whether or not private respondent has the security of tenure

RULING: No. Even though the fishpond is considered as an agricultural land since there is an
existence of civil law lease, the relationship between the owner-lessor and the civil law lessee
as to their relationship, rights and obligations are governed by the Civil Code and not by the
(Agricultural Tenancy Act R.A. 1199). When the lessee's rights ceases because the term has
expired, all other rights created by the exercise of that right must also cease. Cristobal being
hired only as a laborer of the lessee, the case is not covered by a leasehold tenancy under R. A.
No. 1199.

138.OCHENGCO VS CITY COURT OF ZAMBOANGA JANUARY 11,1980

139. RADIO COMMUNICATIONS OF THE PHILS., INC. (RCPI). petitioner, vs. COURT OF
APPEALS and LORETO DIONELA, respondents.
G.R. No. L-44748 August 29, 1986

FACTS: Loreto Doinela (herein private respondent) received a telegram sent by the RCPI
(herein petitioner) with words that according to him was defamatory. The words were: SA IYO
WALANG PAKINABANG DUMATING KA DIYAN-WALA-KANG PADALA DITO KAHIT BULBUL
MO. Defendant corporation as a defense, alleges that the additional words in Tagalog was a
private joke between the sending and receiving operators and that they were not addressed to
or intended for plaintiff and therefore did not form part of the telegram and that the Tagalog
words are not defamatory. Nobody other than the operator manned the teletype machine which
automatically receives telegrams being transmitted. The said telegram was detached from the
machine and placed inside a sealed envelope and delivered to plaintiff, obviously as is. The
additional words in Tagalog were never noticed and were included in the telegram when
delivered. The private respondent being embarrassed with the knowledge that the particular

telegram was already red by many people, he filed a case against the petitioner. The RTC and
the CA ruled in favor of the private respondent. Hence, this petition.
ISSUE: Whether or not there was a breach of contract committed on the part of the petitioner
HELD: Yes, there was a breach of contract on the part of the petitioner thru negligence of its
employees. As a domestic corporation engaged in the business of receiving and transmitting
messages, every time a person transmits a message through the facilities of the petitioner, a
contract is entered into. Upon receipt of the rate or fee fixed, the petitioner undertakes to
transmit the message accurately. There is no question that in the case at bar, libelous matters
were included in the message transmitted, without the consent or knowledge of the sender.
There is a clear case of breach of contract by the petitioner in adding extraneous and libelous
matters in the message sent to the private respondent. As a corporation, the petitioner can act
only through its employees. Hence the acts of its employees in receiving and transmitting
messages are the acts of the petitioner. To hold that the petitioner is not liable directly for the
acts of its employees in the pursuit of petitioner's business is to deprive the general public
availing of the services of the petitioner of an effective and adequate remedy. In most cases,
negligence must be proved in order that plaintiff may recover. However, since negligence may
be hard to substantiate in some cases, we may apply the doctrine of RES IPSA LOQUITUR (the
thing speaks for itself), by considering the presence of facts or circumstances surrounding the
injury.
140. CABATAN VS CA L-44875 AUGUST 19,1986

141.
LL
AND
COMPANY
DEVELOPMENT
AND
AGRO-INDUSTRIAL
CORPORATION, petitioner, vs. HUANG CHAO CHUN AND YANG TUNG FA, respondents.
G.R. No. 142378

March 7, 2002

FACTS: The petitioner alleged that respondents Huang Chao Chun and Yang Tung Fa violated
their amended lease contract over a 1,112 square meter lot it owns, when they did not pay the
monthly rentals thereon in the total amount of P4,322,900.00. It also alleged that the amended
lease contract already expired on September 16, 1996 but respondents refused to surrender
possession thereof plus the improvements made thereon, and pay the rental arrearages despite
repeated demands.

The amended lease contract was entered into by the parties sometime in August, 1991. The
same amended the lease contract previously entered into by the parties on August 8, 1991.
Among the amended terms and conditions were: 2. The term of this lease is FIVE (5) YEARS
from the effectivity of said lease, and with the option to renew, specifically shall commence from
September 15, 1991 and shall expire on September 16, 1996, and maybe adjusted depending
upon the ejectment of tenants; 5. The monthly rental is subject to increase, said increase shall
be based upon the imposition of Real Estate Tax for every two (2) years upon presentation of
the increased real estate tax to the Le[ssees], but said increase shall not be less than 25%
percent and 9. The parties agree as by these presents have agreed to strictly observe the
terms and conditions of the Contract of Lease. Violation by the Lessees of any of the terms and
condition of said contract is equivalent to forfeitures of the deposit in favor of the Lessor,
furthermore the Lessees agreed to vacate the lease[d] premises for any violation of the terms
and condition of said contract, without going to court. The respondents contended that they did
not agree with the new rates in the amended lease contract and that it is not fair to eject them
from the premises after only five years, considering the value of the improvements they
introduced therein.

ISSUE: Whether or not the contract of lease is lawful

RULING: A stipulation in a lease contract stating that its five-year term is subject to "an option to
renew" shall be interpreted to be reciprocal in character. Unless the language shows an intent to
allow the lessee to exercise it unilaterally, such option shall be deemed to benefit both the
lessor and the lessee who must both consent to the extension or renewal, as well as to its
specific terms and conditions.

A unilateral increase in the rental rate cannot be authorized, considering that (1) the option to
renew is reciprocal and, thus, the terms and conditions thereof -- including the rental rate -must likewise be reciprocal; and (2) the contracted clause authorizing an increase -- "upon
presentation of the increased real estate tax to lessees" -- has not been complied with by
petitioner. The contention of the respondents on the ejectment has no merit because what they
did was with the knowledge of the risk the contract was plainly provided for 5-year lease
period and besides, both parties freely and voluntarily entered to the said lease contract.
142. FELICIDAD VILLANUEVA, FERNANDO CAISIP, ANTONIO LIANG, FELINA MIRANDA,
RICARDO PUNO, FLORENCIO LAXA, and RENE OCAMPO, petitioners, vs.HON. MARIANO
CASTAEDA, JR., Presiding Judge of the Court of First Instance of Pampanga, Branch
III, VICENTE A. MACALINO, Officer-in-Charge, Office of the Mayor, San Fernando,
Pampanga, respondents.

G. R. No. L-61311 September 2l, 1987

FACTS: The subject land of this petition is located in the vicinity of the public market of San
Fernando, Pampanga, on which stands a conglomeration of vendors stalls together forming
what is commonly known as a talipapa.

The dispute started way back in 1961, when the municipal council of San Fernando adopted
Resolution No. 218 authorizing some 24 members of the Fernandino United Merchants and
Traders Association to construct permanent stags and sell in the above-mentioned place. The
action was protested on November 10, 1961, in Civil Case No. 2040, where the CFI of
Pampanga, Branch 2, issued a writ of preliminary injunction that prevented the defendants from
constructing the said stalls until final resolution of the controversy. On January 18, 1964, while
this case was pending, the municipal council of San Fernando adopted Resolution G.R. No. 29,
which declared the subject area as "the parking place and as the public plaza of the
municipality, thereby impliedly revoking Resolution No. 218, series of 1961. Four years later, the
aforesaid case was decided and it was held that the land occupied by the petitioners, being
public in nature, was beyond the commerce of man and therefore could not be the subject of
private occupancy. The writ of preliminary injunction was made permanent.

The basic contention of the petitioners is that the disputed area is under lease to them by virtue
of contracts they had entered into with the municipal government, first in 1961 insofar as the
original occupants were concerned, and later with them and the other petitioners by virtue of the
space allocations made in their favor in 1971 for which they saw they are paying daily fees. The
municipal government has denied making such agreements. In any case, they argue, since the
fees were collected daily, the leases, assuming their validity, could be terminated at will, or any
day, as the claimed rentals indicated that the period of the leases was from day to day.
Moreover they contended that the said land was already reserved by the National Planning
Commission to be a public plaza as early as 1951.

ISSUE: Whether or not the act of the municipal council of San Fernando in adopting Resolution
No. 29 impliedly revoking Resolution No. 218 is a violation of non-impairment clause

RULING: No. Every contract affecting the public interest suffers a congenital infirmity in that it
contains an implied reservation of the police power as a postulate of the existing legal
order. This power can be activated at any time to change the provisions of the contract, or even
abrogate it entirely, for the promotion or protection of the general welfare.

Since the occupation of the place in question in 1961 by the original 24 stallholders (whose
number later ballooned to almost 200), it has deteriorated increasingly to the great prejudice of
the community in general. The filthy condition of the talipapa, where fish and other wet items are
sold, has aggravated health and sanitation problems, besides pervading the place with a foul
odor that has spread into the surrounding areas and any other problems.
The problems caused by the usurpation of the place by the petitioners are covered by the police
power as delegated to the municipality under the general welfare clause. This authorizes the
municipal council "to enact such ordinances and make such regulations, not repugnant to law,
as may be necessary to carry into effect and discharge the powers and duties conferred upon it
by law and such as shall seem necessary and proper to provide for the health and safety,
promote the prosperity, improve the morals, peace, good order, comfort, and convenience of the
municipality and the inhabitants thereof, and for the protection of property therein." In this case,
the police power is validly exercised through the adoption of Resolution No. 29 by the municipal
council of San Fernando.

143. IRENEO LEAL, JOSE LEAL, CATALINA LEAL, BERNABELA LEAL, VICENTE LEAL
EUIOGIA LEAL PATERNO RAMOS, MACARIO DEL ROSARIO, MARGARITA ALBERTO,
VICTORIA TORRES, JUSTINA MANUEL, JULIAN MANUEL, MELANIA SANTOS,
CLEMENTE SAMARIO, MARIKINA VALLEY, INC., MIGUELA MENDOZA, and REGISTER
OF DEEDS OF RIZAL, petitioners, vs. THE HONORABLE INTERMEDIATE APPELLATE
COURT (4th Civil Cases Division), and VICENTE SANTIAGO (Substituted by SALUD M.
SANTIAGO), respondents
G.R. No. L-65425 November 5, 1987

FACTS: A document entitled "Compraventa," written entirely in the Spanish language, provided
that en caso de venta no podran vender a otros dischos lotes de terreno sino al aqui vendedro
o los herederos or sucesores de este. It is an express prohibition against the sale of the lots
described in the compraventa to third persons or strangers. On March 21, 1941, a document
entitled compraventa involving three parcels of land, was executed by the private respondent's

predecessors-in-interest, Vicente Santiago and his brother, Luis Santiago, in favor of Cirilio Leal
the deceased father of some of the petitioners. Pursuant to this "Compraventa," the title over the
three parcels of land in the name of the vendors was cancelled and a new one was issued in the
name of Cirilo Leal who immediately took possession and exercised ownership over the said
lands. When Cirilo died on December 10, 1959, the subject lands were inherited by his six
children, who are among the petitioners, and who caused the consolidation and subdivision of
the properties among themselves.
Between the years 1960 and 1965, the properties were either mortgaged or leased by the
petitioners-children of Cirilo Leal to their co-petitioners.
Sometime before the agricultural year 1966-1967, Vicente Santiago approached the petitioners
and offered re- repurchase the subject properties. Petitioners, however, refused the offer.
Consequently, Vicente Santiago instituted a complaint for specific performance before the then
Court of First Instance of Quezon City on August 2, 1967.
ISSUE: Whether or not the express prohibition in the compraventa was lawful

RULING: No. Contracts under the New Civil Code are generally binding between the parties,
their assigns and heirs; however, under Art. 1255 of the Civil Code of Spain, which is applicable
in this instance, pacts, clauses, and conditions which are contrary to public order, are null and
void, thus, without any binding effect.
Parenthetically, the equivalent provision in the Civil Code of the Philippines is that of Art. 1306,
which states: "That contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy. Public order signifies the public weal public policy.
One such condition which is contrary to public policy is the present prohibition to sell to third
parties, because the same virtually amounts to a perpetual restriction to the right of ownership,
specifically the owner's right to freely dispose of his properties. Any prohibition, stated as
indefinite as to time, so much so that it shall continue to be applicable even beyond the lifetime
of the original parties to the contract is void.

144. TOP-WELD MANUFACTURING, INC., petitioner, vs. ECED, S.A., IRTI, S.A., EUTECTIC
CORPORATION,
VICTOR
C.
GAERLAN,
and
THE
HON.
COURT
OF
APPEALS, respondents.
G.R. No. L-44944 August 9, 1985

FACTS: The petitioner, a domestic corporation entered into separate contracts with two different
foreign entities, IRTI, S.A. (IRTI) and ECED, S.A., (ECED). The two foreign entities mentioned
were not given a certification by the Board of Investments of the Philippines and a license by the
Security and Exchange Commision to do business in the Philippines. However, the parties
continue to enter into said contracts.
The agreement between IRTI and the petitioner was that the petitioner was constituted a
licensee of IRTI to manufacture welding products under certain specifications, with raw
materials to be purchased by the former from suppliers designated by IRTI, for a period of three.
In another agreement between the petitioner and the ECED, the petitioner was designated as
ECED's distributor in the Philippines of certain welding products and equipment. By its terms,
the contract was to remain effective until terminated by either party.
Upon learning that the two foreign entities were negotiating with another group to replace the
petitioner as their licensee and distributor, the latter instituted a Civil Case against IRTI, ECED
another corporation named EUTECTIC Corporation, another foreign entity and an individual
named Victor C. Gaerlan, a Filipino citizen alleged to be the representative and employee of
these three corporations.
In its complaint, the petitioner sought the issuance of a writ of preliminary injunction to restrain
the corporations from negotiating with third persons or from actually carrying out the transfer of
its distributorship and franchising rights. It also asked the court to prohibit the defendants from
terminating their contracts with the petitioner.

ISSUE: Whether or not the petitioner can compel the foreign entities not to terminate and/or
from negotiating with third persons in producing and distributing its products

RULING: No. The petitioner had actual knowledge of the applicability of R.A. No. 5455 (An Act
to Require that the Making of Investments and the Doing of Business within the Philippines by
Foreigners or Business Organizations Owned in Whole or in Part by Foreigners Should
Contribute to the Sound and Balanced Development of the National Economy on a SelfSustaining Basis, And For Other Purposes) at the time the contract was executed and at all
times thereafter. This conclusion is compelled by the fact that the same statute is now being
propounded by the petitioner to bolster its claim. The petitioner was also a party at fault,
because he has the knowledge that the foreign corporations are not licensed to do business in
the Philippines, notwithstanding this fact he still entered into those contracts. The very purpose
of the law was circumvented and evaded when the petitioner entered into said agreements
despite the prohibition of R.A. No. 5455. The parties in this case being equally guilty of violating
R.A, No. 5455, they are in pari delicto, in which case it follows as a consequence that petitioner
is not entitled to the relief prayed for in this case. The law will not aid either party to an illegal
agreement.
145

UCPB General Insurance Corporation Inc. vs Masagana Telemart, Inc. (GR 137172 April 4,
2002)
Facts:
Masagana Telemart had an issurance plan with UCPB General Insurance Corporation
Inc which covered 22 May 1991 to 22 May 1992. On June 13, 1992, the properties of Masagana
Telemart in Taft Avenue were burned. A month after the tragedy, Masagana tendered 5
Equitable Bank Manager's Checks as renewal premium payments which UCPB accepted. The
following day, Masagana made its formal demand for indemnification for the burned insured
properties. UCPB rejected MAsagana's claim since the policies expired and were not renewed
for anoter term, Masagana sent a notice of non-renewal earlier and the properties were burned
before the tender of premium payment.
Issue:
Whether or not the stipiulations in the insurance contract is void
Ruling:
No, the stipulations in the insurance contract is not void. Art 1306 of the civil code has provided
that The contracting parties may establish such stipulations clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good customs, public
order, or public policy. The insurance policy between UCPB and Masagana is not against the
law, morals, good customs, public order or public policy. Moreover, there is nothing in Section
77 which prohibits the parties in an insurance contract to provide a credit term within which to
pay the premiums.

146 San Miguel Corp. vs NLRC (GR 80774 May 31, 1988)
Facts:
San Miguel Corporation sponsored a program which granted cash awards to all SMC
employees except the Division Managers and higher ranked personnel. Vega proposed an
innovation proposal which would eliminate the defects in the quality of taste of the San Miguel
BeerGrande. Vega demanded the cash award, but his proposal was rejected and so, he was
not able to receive the cash award. A case was brought to the labor arbiter, but the arbiter
dismissed the complaint on the ground that the money claim of Vega is not incidental to his
employment. Case was then brought to the Supreme court.

Issue:
Whether or not the innovation program of San Miguel Corporation is an enforceable contract
and should Vega be granted with award money
Ruling:
Yes, the innovation program of San Miguel Corporation is an enforceable contract, and
therefore, Vega should be granted with award money. The SMC innovation program was an
invitation from SMC to its employees to submit innovation proposals and that it undertook to
grant cash awards to employees whoa ccept such invitation and whose suggestions, satisfied
the requirements of the innovation program. This could be translated into some substantial
benefit to the Corporation. Therefore, this could be taken as facio ut des or I do that you give.
Therefore, there has bee an implied contract that has risen between the corporation and Vega.

147. Corpus vs CA (98 SCRA 424)

Facts:
David is a lawyer who accepted the case of Corpus. There has been no express
agreement between the two with regards to attorney's fees and other fees. David filed a case
against Corpus. David won and was paid a check by Corpus. David declined the check and
Corpus contended that since David rejected the check, the services that he had done for him
has is gratuitous.
Issue:
Whether or not there has been a valid contract betwen David and Corpus
Ruling:
Yes, there has been a valid contract between David and Corpus. It may be a fact that there has
been no express agreement between the two, but there existed an implied agreement for the
payment of attorney's fees as evidenced by becoming a lawyer to Corpus. The Payment of
attorney's fees to David may be justified by virtue of the innominate contract of facio ut des (I Do
that you Give). Furthermore, no one shall be unjustly enrich at the expense of another, which is
what Corpus did.

148. Alcuaz vs. PSBA

Facts:
Teachers of PSBA has signed a contract with the said school stating that their contracts are only for 1
semester. That after such, PSBA will not have any contractual relationship with any of those teachers. Some of

those teachers who have been working in PSBA questioned the validity of the said contract and if there is any
way that the teachers can have a permanent employed status in the school.
Issue:
Whether or not the teachers can be employed permanently notwithstanding the existence of the contract
Ruling:
Yes, the teachers can be employed permanently notwithstanding the existence of the contract. It has been held
that teachers who have been teaching in the institution should have permanent status in the institution and they
cannot be removed without just cause and due process.

149.PNB vs CA (GR 88880 April 30, 1991)

Facts:
The Rocamora spouses obtained a loan from PNB that is payable within 5 years. It has an
interest of 12% per annum and a penalty fee of 5% per annum in case of delayed payments.
They mortgaged a real estate and a chattel mortgage over machineries and the remaining
mortgage was guaranteed by CIGLF. The promisory note and the real estate mortgage deed
contained an escalation clause which allowed PNB to increa the 12% rate anytime without
notice, within the limits allowed by law. During the due date, the amount PNB is collecting
amounted to P 206,297.47, which is inclusive of the principal, interest and penalty. The spouses
refused to pay and alleged that PNB increased the interest to 42% per annum .
Issue:
Whether or not the interest imposed by PNB is void
Ruling:
Yes, the interest imposed by PNB is void. There may be the presence of an escalation clause in
the contract, but the clause does not give PNB the inbridled right to adjust interest rates
unilaterally. The rate of interest made should be made as a result of agreement between
parties. Any change must be mutually agreed upon, otherwise the change carries no binding
effect. According to Article 1308 of the Civil Code, a stipulation on the validity or compliance
with the contractthat is left solely to the will of one of the parties is void. Therefore, the
unconsented increase in interest rates is ineffective since it transgresses the principle of
mutuality of contracts.
150.FGU Insurance Corp. G.P. Sarmiento Trucking Corp. and Lamebert M. Eroles (GR 141910 Aug. 6, 2002)
Facts:
GPS delivered 30 units of Condura SD white refrigeratorsto the Central Luzon Appliances in Dagupan
City. While it was on its way, it collided with an unidentified truck, causing it to fall into a deep canal which resulted

to in the damage of the refrigerators. FGU, the insurarer, paid the value of the cargoes to the subrogee of the
rights and interests of FGU. FGU then sough reimbursement from GPS. FGU filed a complaint for damages and
breach of contract against GPS. RTC granted the motion to dismiss and denied the motion for reconsideration.
The case has been elevated to theCA and SC.
Issue:
Whether or not GPS can escape liability arising from the breach
Ruling:
No, GPS cannot escape liability arising from the breach. In culpa contractual, the existence of the contract and the
failure of its performance can justify the right to relief. The law will not permit a party to be set free from liability for
any kind of misperformance. A breach upon the contract confers upon the injuured party a valid cause for
recovering that which may have been lost or suffered.
151. Siredy Enterprise Inc. vs CA (GR 129039 Sept. 17, 2002)
Facts:
De Guzman is an architect who owns the Jigscon Construction. Siredy, on the other
hand is the developer of a subdivision in Marilao, Bulacan. The president of Siredy executed a
letter of authorization to Santos which allows the latter to negotiate and enter contract in relation
to the subdivision and that the proceeds will be deposited to the former. Santos then entered a
deed of agreement with De Guzman. De Guzman proceeded with the construction of houses in
the subdivision, but when the time came when he needed to collect payment, he failed to collect
any amount from Siredy. Siredy contended that they did not authorise De Guzman to enter into
a contract with anyone in regards to the construction of houses in the subdivision.

Issue:
Whether or not contracts can take effect when it has been entered by its agent

Ruling:
Yes, contracts can take effect even if it has been entered, provided that such agent has been
duly authorised. This has been provided for by Art 1311 of the Civil code which states that
Contracts take effect only between the parties, their assigns and heirs, except in case where the
rights and oligations arising from the contract are not transmissible by their nature, or by
stipulation or by provision of law. No exception has been shown to this case. Since The
president of Siredy signed the letter of authorisation, he has vested Santos the authority to act
in his behalf. Therefore, the contract that he has entered with De Guzman is valid.

152. Bobis vs Prov. Sheriff of Camarines Norte (GR 29838 March 18, 1983)
Facts:

A Complaint for annulment of execution of sale has been filed in CFI Camarines Norte. A land was owned by
the Eco spouse, by which the said land has been cultivated by the Bobis Spouses. Ortega, a third party, filed a
case to recover of the planted land but subsequently reached a compromise agreement. . The Ecos then sold
the land to the Bobises. After the sale, the Ecos only paid 50php to Alfonso as part of the Compromise
agreement for the improvements. A writ of execution has been ordered and commanded the Sheriff that the
goods of the defendants be caused to be made te sum of 140php. The sheriff levied upon the land which
included the land that the Ecos sold to the Bobises. The latter then sought for the modificatio of the writ
contending that they were not the ones obliged to pay but the former. The motion was then denied and the sheriff
sold the land to the highest bidder. No one exercised the right of redemption, and so the sheriff executed an
Officers Deed of Sale in favor of the highest bidder. The highest bidder requested for the Bobises to surrender
the title within 5 days but they did not surrender.
Issue:
Whether or not the sale of the Sheriff to the highest bidder is valid
Ruling:
No, the sale of the Sheriff to the highest bidder is not valid. Only the Ecos were adjudged to pay
the highest bidder and the Bobises were not ordered to pay the highest bidder. The order made
by the judge for commanding the sheriff against the property of the Ecos and Bobises was
unjust since the ownership of the lot has been transferred from the Ecos to the Bobises. Giving
the liability of the Ecos to the Bobises is a prejudice to the right of the new owners. Selling the
land to another person would prejudice the right of the new owners, which are the Bobises.
153. House International Building Tenants Association Inc. vs IAC (GR 752887 June 30, 1987)
Facts:
The House International is a non stock non profit corporation whose directors and
members are heads of the families of the Building in 777 Ongpin Street. The land was formerly
owned by Atty. Ang who mortgaged it to the GSIS to be able to secure payment of a loan. The
mortgage has been forclosed and the right of redemption over the property has expired;
resulting to the selling of the said building to the Centertown Marketing through a deed of
conditional sale, without informing the tenants of the building. The said Company was not
authorised to engage in real estate, so it resulted for it to corporate a sister company for them to
be able to engage in real estate business. The House Association filed for the annulment of the
deed of conditional sale.
Issue:
Whether or not the House International Building Tenants Association is a proper party to file a
case for the annulment of conditional sale

Ruling:
No, the House International Building Tenants Association is a proper party to file a case for the
annulment of conditional sale. Article 1397 of the Civil Code has provided that The action for the
annulment of contracts may be instituted by all who are thereby obliged principally or

subsidiarily. The Association is not a party nor a privy to the Deed of conditional sale and
therefore, it cannot assail the validity of the said contracts.

154.Rebecca C. Young et. al vs CA (GR 79518 Jan. 13, 1989)

Facts:
The Defendant Philippine Holding, Inc. is the former owner of a piece of land located at
Soler St., Sta. Cruz, Manila, and a two storey building erected thereon, consisting of six units.
The owner Philippine Holding, Inc. secured an order from the City Engineer of Manila to
demolish the building. Antonio Young, then a tenant of said Unit 1352, filed an action to annul
the City Engineer's demolition As an incident in said case, the parties submitted a Compromise
Agreement to the Court. Paragraph 3 of said agreement provides that plaintiff (Antonio S.
Young) and Rebecca Young and all persons claiming rights under them bind themselves to
voluntarily and peacefully vacate the premises which they were occupying as lessees which are
the subject of the condemnation and demolition order and to surrender possession . A case was
filed to the RTC and Young contended that even assuming that her supposed right of first
refusal is a stipulation for the benefit of a third person, she did not inform the obligor of her
acceptance as required by the second paragraph of Article 1311 of the Civil Code.
Issue:
Whether or not Youngs stipulation that gave her the right of refusal is a stipulation pour autrui

Ruling:
The stipulation that young gave may be a stipulation pour autrui but it is unrebutted that
she did not communicate her acceptance whether expressly or impliedly. The requisites of a
stipulation pour autrui or a stipulation in favor of a third person are the following: (1) there must
be a stipulation in favor of a third person (2) the stipulation must be a part, not the whole of the
contract (3) the contracting parties must have clearly and deliberately conferred a favor upon a
third person, not a mere incidental benefit or interest (4) the third person must have
communicated his acceptance to the obligor before its revocation. (5) neither of the contracting
parties bears the legal representation or authorization of the third party. The argument is
pointless, considering that the sale of subject property to some other person or entity constitutes
in effect a revocation of the grant of the right of first refusal to Rebecca C. Young.

155. Associated Bank vs CA (GR 123793 June 29, 1998)

Facts:
In 1975 Associated Banking Corporation and Citizens Bank and Trust Company
merged to form just one banking corporation known as Associated Citizens Bank, the
surviving bank. On 1981, the Associated Citizens Bank changed its corporate name to
Associated Bank by virtue of the Amended Articles of Incorporation. On 1977, the

defendant executed in favor of Associated Bank a promissory note whereby the former
undertook to pay the latter the sum of P2,500,000.00 payable on or before 1978. As
per said promissory note, the defendant agreed to pay interest at 14% per annum, 3%
per annum in the form of liquidated damages, compounded interests, and attorneys
fees, in case of litigation equivalent to 10% of the amount due. The defendant, still
owes plaintiff bank the amount of P2,250,000.00 exclusive of interest and other
charges. Despite repeated demands the defendant failed to pay the amount due.
Issue:
Whether or not the promissory note in the amount of 2.5M in favor of CBTC is a
contract pour autrui
Ruling:
No, the promissory note in the amount of 2.5M in favor of CBTC is not a contract
pour autrui. The requisites of Contract pour autrui are the following: 1) the stipulation in
favor of a third person must be a part of the contract, and not the contract itself; (2) the
favorable stipulation should not be conditioned or compensated by any kind of obligation;
and (3) neither of the contracting parties bears the legal representation or authorization of
the third party. There has been no stipulation in the contract that would even resemble a
provision in consideration of a third party and the instrument does not disclose the purpose
of the loan contract. The promisory note merely lays down the terms of payment.

156. Velasco et al vs CA
Facts:
On November 10, 1965, Alta Farms secured a loan amounting to Three Million Two Hundred
Fifty Five Thousand Pesos (P3,255,000.00) and another additional loan of Five Million Sixty
Two Thousand Pesos (P5,062,000.00) from GSIS in order to finance a piggery project. Alta
Farms defaulted in the payment of said loan. It then executed a Deed of Sale with Assumption
of Mortgage with Asian Engineering Corporation but without the consent of GSIS in violation of
the mortgage contracts. Even without obtaining approval from the GSIS, AEC executed an
Exclusive Sales Agency, Management and Administration Contract in favor of Laigo Realty
Corporation, with the intention of converting the piggery project into a subdivision. After the
development of the area, LRC entered into a contract with Lumanlan to construct 20 houses for
the home buyers. Lumanlan then constructed the houses for which he claims a balance of
P309,187.76. Lumanlan admitted that Mrs. Laigo paid him several checks amounting to
P124,855.00 but which checks were all dishonoured. Then, LRC entered into another contract
with Velasco to construct houses for the home buyers who agreed with Velasco on the prices
and downpayment to be paid by the individual home buyers. When neither Laigo nor the home
buyers paid for the houses constructed, Velasco wrote to GSIS to intercede for the unpaid
accounts of the home buyers.
Issue:
Whether or not GSIS is liable to the Velasco and Lumanlan for the cost of the construction now
owned by the GSIS?

Held:
Yes. The GSIS is liable for the cost of construction incurred by Velasco and Lumanlan for the
construction of the houses for the home buyers. GSIS should pay them. Since, GSIS assumed
the ownership of the houses built and was benefited by the same. In Article 2127, the mortgage
extends to the natural accessions, to the improvements, growing fruits, and rents.

157. Yu vs. CA
Facts:
Yu is the exclusive distributor of the House of Mayfair wall covering products here in the
Philippines. His former dealer (private respondent) purchased the merchandise from the House
of Mayfair in England through FNF Trading in West Germany and sold said merchandise in the
Philippines. The House of Mayfair has had an exclusive agency agreement with Yu to promote
and procure the merchandise in the Philippines. Yu insisted that the he was by-passed and that
private respondent acted in concert with The FNF Trading in misleading Mayfair into believing
that the goods ordered by the Trading were intended for shipment to Nigeria although they were
actually shipped and sold in the Philippines. The private respondent then professed ignorance
of the exclusive contract in favor of Yu. Yu then filed for preliminary injunction.
Issue:
Whether or not the writ of preliminary injunction must be granted to the petitioner?
Held:
Yes. The writ of preliminary injunction must be granted. The court held that injunction is the
proper remedy to prevent a wrongful interference with contracts by strangers to such contracts
where the legal remedy is insufficient and resulting to injury is irreparable. The liability of private
respondent does not emanate from the four corners of the contract for Unisia Merchandising
Co. (private respondent) is not a party thereto but its accountability is an independent act
generative of civil liability. The right to perform an exclusive distributorship agreement and to
reap the profits resulting from such performance are proprietary rights which a party may protect
which may otherwise not be diminished by the expedient act of utilizing or interposing a person
or firm to obtain goods from the supplier to defeat the very purpose for which the exclusive
distributorship was conceptualized at the expense of the sole authorized distributor.

158.Malbarosa vs. Ca
Facts:
Malbarosa was the president and General Manager of Philtectic Corp., a subsidiary of private
respondent SEADC. AS an officer, he was issued a car and membership in the Architectural

Center. Malbarosa wanted to resign and intimidated the vice chairman and the Board of
Directors of the private respondent so that his incentive compensation is paid to him as
President of Philtectic. He then submitted his resignation to the VP. One of the officers met with
the petitioner and said that he will get an approximate amount of P395k. After receipt of the
resignation, the VP sent a letter-offer to the petitioner stating the acceptance of the resignation
and advised him that he is entitled to P251k as his incentive compensation. Also, the VP
proposed the satisfaction of his incentive by giving him the car, instead of cash. Malbarosa was
required to affix his signature in the letter if he agrees to the offer. Malbarosa refused to sign the
letter. Later, the private respondent demanded that Malbarosa return the car and turn over the
membership in the Architectural Center. Malbarosa then wrote to the counsel of the private
respondent that he cannot comply with the demand since he already accepted the offer 14 days
after it was made. He enclosed a Xerox of the original with his affixed signature as required.
With his refusal, private respondent instituted an action for recovery.
Issue:
Whether or not there was a valid acceptance on the part of Malbarosa of the letter-offer of the
respondent?
Held:
No. There was no valid acceptance. Under Article 1319 of the New CC, the consent by a party
is manifested by the meeting of the offer and the acceptance upon the thing and the cause
which are to constitute the contract. An offer may be reached at any time until it is accepted. An
offer that is not accepted does not give rise to consent. To produce a contract, there must be
acceptance of the offer which may be express or implied but must not qualify the terms of the
offer. The acceptance must be absolute, unconditional and without variance any sort from the
offer.

159. Lim vs. CA

Facts:
Private respondent owns a parcel of land which was sold to the petitioners. The petitioners
broker prepared a receipt embodying the agreement with certain conditions. The conditions are
as follows: a) The sum of P200,000.00 shall form part of the purchase price; b) The balance
shall be paid in full after the ejectment of the squatters; c) The seller assumes full responsibility
to eject the squatters within a period of sixty (60) days from the date of receipt of the earnest
money, in case of failure, the seller shall refund to the buyer the sum of P200,000.00, however if
the buyer shall fail to pay the balance after the seller has ejected the squatters, the amount of
P200,000.00 shall be forfeited by the seller; d)Taxes shall be paid by the buyer; e) Zapalta
Realty Co., shall be the exclusive broker of the buyers; f) Buyer assumes full responsibility of
the premises immediately upon the eviction of the squatters. The seller then failed to eject the
squatters but the buyers did not demand for the return of the earnest money. The seller then
met with the buyers to negotiate a price increase to facilitate the ejectment of the squatters.

Then the seller insisted in returning the earnest money for the seller still failed to eject the
squatters. The buyer refused to accept the refund. The buyers now claims that the contract of
sale was already perfected.
Issue:
Whether or not there was a perfected contract of sale?
Held:
Yes. The contract of sale was already perfected. Art 1475 of the CC states, Whenever earnest
money is given in a contract of sale, it shall be considered as part of the price and as proof of
the perfection of the contract. Failure to comply with the condition only gives the party the
option either to refuse or to proceed with the sale or to waive the condition. Art 1545 of the CC
states, Where the obligation of either party to a contract of sale is subject to any conditions
which is not performed, such arty may refuse to proceed with the contract or he may waive
performance of the condition. If the other party has promised that the condition should happen
or be performed, such first mentioned party may also treat the nonperformance of the condition
as a breach of warranty. Where the ownership in the things has not passed, the buyer may treat
the fulfillment by the seller of his obligation to deliver the same as described and as warranted
expressly or by implication in the contract of sale as a condition of the obligation of the buyer to
perform his promise to accept and pay for the thing. In this case, there is already a perfected
contract. The condition was imposed only on the performance of the obligation. Hence,
petitioners have the right to choose whether to demand the return of P200,000.00 which they
have paid as earnest money or to proceed with the sale. They have chosen to proceed with the
sale and private respondent cannot refuse to do so.

160.. Badillo vs. Ferrer

Facts:
Macario died without a will in 1966, leaving a widow, Clavita and five minor children. He left a
parcel of land. In 1967, Clarita, in her own behalf and as natural guardian of the minor plaintiff
executed a deed of extrajudicial partition and sale of the property through which she sold the
property to Gregorio. Modesta, a sister of Macario, was able to obtain guardianship over the
property and persons of the minor children on 1968.
In 1970, Modesta caused the minor children to file a complaint to annul the sale of their
participation in the property and asked that as co-owner they be allowed to execute the right of
legal redemption with respect to Claritas participation therein. The trial court annulled the sale
to Gregorio of the minor childrens participation in the property and allowed them to redeem the
participation of their mother therein.
Issue:
Whether or not the contention is untenable?

Held: Yes, the contention is untenable. Under Art. 1390 of the CC, it renders a contract voidable
if one of the parties is incapable of giving consent to the contract or if the contracting partys
consent is vitiated by mistake, violence, intimidation, undue influence or fraud. Surviving widow
has no authority or has acted beyond her powers in conveying to the vendees the undivided
share of her minor children in the property, as her powers as the natural guardian covers only
matters of administration and cannot include the power of disposition, and she should have first
secured court approval before alienation of the property. Since the minors never ratified the
deed, and in fact questioned its validity, the contract remained unenforceable or unauthorized,
and restitution by the minors as to the portion of the purchase price which pertains to their share
is not legally sanctioned.
161. Coronel vs. Constantino
Facts:
A property owned by Honoria Aguinaldo is the subject property. One half of which was inherited
by Emilia Meking Vda. De Coronel together with her sons Benjamin, Catalino and Ceferino, all
surnamed Coronel. The other half was inherited by Florentino Constantino and Aurea
Buensuceso. The share of Emilia and sons were sold to Jess C. Santos and Priscilla Bernardo
by virtue of deed of sale. The property bought by Santos and Bernardo were in turn sold to
Constantino and Buensuceso by virtue of a Compromise Agreement. Constantino and
Buensuceso filed a case claiming that they are the owners of the subject property and
defendants have illegally started to introduce construction on the premises in question, and pray
that defendants respect, acknowledge and confirm the right of ownership of the plaintiffs to the
share, interest and participation of the one-third (1/3) portion of the subject property.
Respondents claimed that the property which is the subject of the deed of sale includes the
share of the sons of Emilia.
Issue:
Whether or not the Contract of Sale executed by Emilia as parent-co-owner is unenforceable
with respect to the shares of her co-heirs-children?
Held:
Yes. The Contract of Sale is unenforceable with respect to the shares of the children of Emilia. It
is true that Emilia executed the deed but it is not a competent proof that Benjamin, son of Emilia
had sold his own share of the subject property. Emilia executed the instrument in her own behalf
and not in representation of her three children. Article 493 of the Civil Code states: Each coowner shall have the full ownership of his part and of the fruits and benefits pertaining thereto,
and he may therefore alienate, assign, or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation or the
mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to
him in the divisin upon the termination of the co-ownership. The sale of the subject property
made by Emilia in favor of Santos and Bernardo is limited to the portion which may be allotted to

her upon the termination of her co-ownership over the subject property with her children. Also,
according to Article 1317 and 1403 (1) of the Civil Code,
Art. 1317. No one may contract in the name of another without being authorized by the latter, or
unless he has by law a right to represent him.
A contract entered into in the name of another by one who has no authority or legal
representation or who has acted beyond his powers shall be unenforceable, unless it is ratified,
expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked
by the other contracting party.
Art. 1403. The following contracts are unenforceable, unless they are ratified:
Those entered into in the name of another person by one who has been given no authority or
legal representation, or who has acted beyond his powers.
Mere silence of Benjamin does not mean that he consents to the sale of his share. No evidence
was presented that the three sons were aware of the sale made by their mother. Unaware of
such sale, Benjamin could not be considered as having voluntarily remained silent and
knowingly chose not to file an action for the annulment of the sale. His alleged silence and
inaction may not be interpreted as an act of ratification on his part.
162. LCC CORP VS FARRALES L-30786 FEBRUARY 20, 1984
163. Clarin vs. Rulona
Facts:
Clarin owns a 10 hectare land in Bohol which is said to be his share from his co-owners. Clarin
executed a Contract of Sale in favor of Rulona with the agreed purchase price of P2,500.00.
The initial payment will be P1,000.00 and the remaining balance will be paid monthly in the
amount of P100.00. Rulona then paid the initial payment and the initial monthly payment. Late
on Clarin returned the P1,100.00 against Rulonas will for he was not able to convince the other
co-owners regarding the sale of his share. Clarin also said that there was no perfected contract
of sale for it was subjected to the condition that his co-owners would consent to the sale of his
share.
Issue:
Whether or not there was a perfected Contract of Sale?
Held:
Yes. There is a perfected Contract of Sale. It can be seen that Clarin agreed to sell and Rulona
agreed to buy a definite object which is the 10 hectare land. Clarin and Rulona also agreed on
the price of the said land which is P2,500.00. As Clarins receipt of the payment made by
Rulona, it cannot be denied that the Contract of Sale was perfected for the contract was already

partially been executed thru the acceptance of the intial payment. Clarins acceptance of said
payment clearly showed his consent to the contract thereby precluding him from rejecting its
binding effect. A contract is valid even though one of the parties who entered into it is against
his better judgment.
164. Magsaysay vs. CA
Facts:
Private respondent law firm of Salcedo, Del Rosario, Bito, Misa and Lozada was the lessee of
the whole 9th floor of the petitioners building under a five year lease contract with express
provisos against any extension or renewal by implication of the lease and for the review of the
rental rate at the end of the second year of the lease and every two years thereafter. Before the
end of the fourth year the petitioner notified the respondent regarding the increase in the rental
rate. There were a lot of negotiations regarding the renewal of the contract and increase in the
rental rate. The petitioner now demanded the respondent to vacate the premises and that it pay
the rental in arrears.
Issue:
Whether or not there was an implied new lease after the expiration of the two-year period of the
renewed lease?
Held:
No. There was no implied new lease after the expiration of the two-year period of the renewed
lease. There could be no such implied renewal or right to ask the courts to fix a longer term
(Articles 1670 and 1687 of CC) in the face of the express stipulation in the basic and fixed fiveyear contract that the lease shall not be deemed extended or renewed by implication beyond
the stipulated contractual period for any cause or reason whatsoever but only by negotiations on
or before 90 days prior to the expiration date and that the rental provided was subject to review
at the end of the second year and every two years thereafter, commensurate with increases in
operating expenses including the cost of labor. Even in the several negotiations, the mere fact
that the lessee was willing to pay what he claimed to be a reasonable rent which was less than
that demanded by the lessor did not operate in any sense to extend said renewal of the lease
simply because respondent continued wrongfully detaining the premises after the expiration of
the fixed period of the lease.
165. DOUGLAS MILLARES AND ROGELIO LAGDA VS NLRC GR 110524
166. Rural Bank of Caloocan vs CA
Facts:
Maxima Castro together with Severino Valencia went to the Rural Bank of Caloocan to apply for
a loan. Valencia arranged everything with regards to the loan including the supplying of the
latter personal data needed for the application. When the loan was approved Castro was

accompanied by the Valencia spouses to sign a promissory note which corresponds to her loan
in favor of the bank. On that same day, the spouses also obtained from the bank an equal
amount of loan. They also signed a promissory note and had Castro affixed her signature as comaker. Both loans were secured by a real estate mortgage on Castros house and lot. Later, the
house and lot was sold at a public auction to satisfy the obligation covering the two promissory
notes plus interest and attorneys fees. Castro then claimed that she is a 70 year old widow who
cannot read and write in English. Since she needed money to invest in the business of the
Valencia spouses, she obtained a loan. While obtaining said loan, she needed to sign several
forms with no one explaining to her the nature and contents of the documents. It was only when
she received the letter from the sheriff that she learned that the mortgage contract which was an
encumbrance on her property and that she was made to sign as co-maker of the promissory
note without her being informed. Castro filed a suit against the Valencias contending that thru
mistake on her part or fraud on the part of the Valencias she was induced to sign as co-maker
of a promissory note and to constitute a mortgage on her house and lot.
Issue:
Whether or not the promissory note executed by Castro is valid?

Held:
The Valencias defrauding Castro by making her sign the promissory note and the mortgage
contract, they also misrepresented to the bank Castros personal qualifications in order to
secure its consent to the loan. As a result of the fraud upon Castro and the misrepresentation to
the bank inflicted by the Valencias both Castro and the bank committed mistake in giving their
consents to the contracts. Substantial mistake vitiated their consents given. For if Castro had
been aware of what she signed and the bank of the true qualifications of the loan applicants, it is
evident that they would not have given their consents to the contracts. Art. 1342 of the CC
which provides: Misrepresentation by a third person does not vitiate consent, unless such
misrepresentation has created substantial mistake and the same is mutual. We cannot declare
the promissory note valid between the bank and Castro and the mortgage contract binding on
Castro, for while the contracts may not be invalidated insofar as they affect the bank and Castro
on the ground of fraud because the bank was not a participant thereto, such may however be
invalidated on the ground of substantial mistake mutually committed by them as a consequence
of the fraud and misrepresentation inflicted by the Valencias.

167. Edilberto Cruz and Simpliciano Cruz v. Bancom Finance Corp.

(Union Bank of the Phils.)
GR 147788, Mar. 19, 2002

FACTS: Although the Deed of Sale between petitioners and Candelaria Sanchez stipulated a
consideration of P150,000, there was actually no exchange of money between them.
Respondent never offered any evidence to refute the foregoing. On the contrary, it even
admitted that the stipulated consideration of P150,000 in the Deed of Sale had never been
actually paid by Sanchez to petitioners.
ISSUE: Whether or not the Honorable Court of Appeals seriously erred when it held that the
petitioners intended to enter into a sale of the property in question and that the declarations of
Petitioner Fr. Edilberto Cruz in Court belied the court a quos finding that the Deeds of Sale in
question were absolute simulations.
HELD: The Deed of Sale were absolutely simulated, hence, null and void. Thus, it did not
convey any rights that could ripen into valid titles. There being no valid real estate mortgage,
there could also be no valid foreclosure or valid auction sale, either. At bottom, respondent
cannot be considered either as a mortgagee or as a purchaser in good faith. This being so,
petitioners would be in the same position as they were before they executed the simulated Deed
of Sale in favor of Sanchez; they are still the owners of the property.

168. Francisco Cuison, et al. v. Jose Ramolete

GR 51291, May 29, 1984
FACTS: Marciano Cuizon distributed his registered parcel of land between his daughters Rufina
and Irene. The latter has the salt beds and she later executed a Deed of Sale with Reservation
of Usufruct involving the property in favor of the petitioners Francisco, Rosita, who are both
minors, and Purificacion, who was assisted by their mother, Rufina. However, the sale was not
registered because the petitioners felt it was unnecessary due to the lifetime usufructuary rights
of Irene. In 1976, the original Cert of title No. 0171 was issued in the name of Marciano Cuizon
and cert of title No. 10477 covering the property in question was issued by the Register of
Deeds to Irene Cuizon. The latter died in 1978 hence, Rufina, in the extrajudicial settlement of
the estate, adjudicated to herself all the property of the decedent including the property in
question and, thus, TCT No. 12665 was issued in favor of the petitioners. However, the
respondent, Domingo Antigua, allegedly selected by the heirs of Irene to act as administrator,
filed a petition for letters of administrator which was granted. As administrator, he filed an
inventory of the estate of Irene and include the salt beds and later asked the court to sell the
property and prayed that one of the petitioners deliver the salt to him.
ISSUE: Whether or not a probate court has jurisdiction over parcels of land already covered by
a Transfer Certificate of Title issued in favor of owners who are not parties to the intestate
proceedings if the said parcels have been included in the inventory of properties of the estate
prepared by the administrator
HELD: A probate court has NO jurisdiction to order the sale of properties belonging to
registered owners (with Certificates of Title), if said owners are not parties to the proceedings,

and this is so even if the properties had been included in the inventory submitted by the
administrator of the estate.
In the instant case, the property involved is not only claimed by outside parties but it, was sold
seven years before the death of the decedent and is duly titled in the name of the vendees who
are not party to the proceedings. In Bolisay vs. Alcid, (85 SCRA 213), this Court was confronted
with a similar situation. The petitioners therein sought to annul the order of the respondent court
in a special proceeding which in effect ruled that notwithstanding that the subject property was
duly titled in the name of petitioners, the administratrix of the intestate estate involved in said
proceeding had the right to collect the rentals of said property over the objection of the titled
owners just because it was included in the inventory of said estate and there was an ordinary
action in the regular court over the ownership thereof and the estate was one of the parties
therein. This Court viewed the petition as one seeking for a prima facie determination and not a
final resolution of the claim of ownership. Having been apprised of the fact that the property in
question was in the possession of third parties and more important, covered by a transfer
certificate of title issued in the name of such third parties, the respondent court should have
denied the motion of the respondent administrator and excluded the property in question from
the inventory of the property of the estate. It had no authority to deprive such third persons of
their possession and ownership of the property. Respondent court was clearly without
jurisdiction to issue the order of June 27, 1979. Thus, it was unnecessary for the petitioners to
first apply for relief with the intestate court.

169. Private Development Corp. of the

Phils. v. IAC & Ernesto C. del Rosario
GR 73198, Sept. 2, 1992
FACTS: Davao Timber Corporation (DATICOR) and the Private Development Corporation
(PDCP) entered into a loan agreement whereby PDCP extended to the former a loan of US$
265,000.00 and another in the amount of P2,500,000.00 which stipulates that that the former
was to be paid with an interest rate of eleven and three fourths (11-3/4%) per cent per annum
and the latter at the rate of twelve (12%) per cent per annum. The loans were originally secured
by a first mortgage executed by President of DATICOR, in his personal capacity, and his sister,
Cuerva, as third party mortgagors on a parcel of land which they owned in common. Later, Del
Rosario and Cuerva partitioned this mortgaged property and two certificates of titles were
issued.
PDCP executed a partial release of mortgage on the parcel of land owned by Cuerva, provided
that DATICOR was to mortgage an additional five (5) parcels of land consisting of prime
industrial lands with buildings thereon. Hence, DATICOR executed an Addendum to Mortgage
in favor of PDCP and likewise executed a Deed of Chattel Mortgage on the machineries and
equipment attached to the land in Davao Oriental as added security for said loans.
A total of P3,000,000.00 was already paid by Del Rosario to PDCP and which the latter applied
to interests, service fees and penalty charges, such that according to PDCP, DATICOR still has

an outstanding balance on the principal loan of P10,887,856.99 as of May 15, 1983. Hence,
PDCP initiated extra-judicial foreclosure proceedings against the parcel of land owned by Del
Rosario in Manila and the five (5) parcels of land owned by DATICOR in Davao Oriental.
ISSUE: Whether or not declaring the stipulations of interest in the loan agreement between
DATICOR and PDCP is void and of no effect
HELD: The law should not be interpreted to mean forfeiture of the principal loan as that would
be unjustly enriching the borrower. The unpaid principal debt still stands and remains valid but
the stipulation as to the usurious interest is void; consequently, the debt is to be considered
without stipulation as to the interest. In a simple loan with stipulation of usurious interest, the
prestation of the debtor to pay the principal debt, which is the cause of the contract (Art. 1350,
Civil Code), is not illegal. The illegality lies only as to the prestation to pay the stipulated interest;
hence, being separable, the latter only should be deemed void, since it is the only one that is
illegal. The foregoing interpretation is reached with the philosophy of usury legislation in mind; to
discourage stipulations on usurious interest, said stipulations are treated as wholly void, so that
the loan becomes one without stipulation as to the payment of interest. It should not, however,
be interpreted to mean forfeiture even of the principal, for this would unjustly enrich the borrower
at the expense of the lender. Furthermore, penal sanctions are available against a usurious
lender, as a further deterrence to usury. The principal debt remaining without stipulation for
payment of interest can thus be recovered by judicial action.
170. Ong v. Ong
GR 67888, Oct. 8, 1985

FACTS: On February 25, 1976 Imelda Ong, for and in consideration of One (P1.00) Peso and
other valuable considerations, executed in favor of private respondent Sandra Maruzzo, a
minor, a Quitclaim Deed whereby she transferred, released, assigned and forever quit-claimed
to Sandra Maruzzo, her heirs and assigns, all her rights, title, interest and participation in the
ONE-HALF () undivided portion of the parcel of land. However, on November 19, 1980,
Imelda Ong revoked the aforesaid Deed of Quitclaim and, thereafter, on January 20, 1982
donated the whole property to her son, Rex Ong-Jimenez. On June 20, 1983, Maruzzo, through
her guardian (ad litem) Alfredo Ong, filed an action for the recovery of ownership/possession
and nullification of the Deed of Donation over the portion belonging to her and for Accounting.
RTC rendered judgment in favor of respondent Maruzzo and held that the Quitclaim Deed is
equivalent to a Deed of Sale and, hence, there was a valid conveyance in favor of the latter.
Petitioners appealed to IAC and on June 20, 1984, the latter affirmed the appealed judgment
and held that the Quitclaim Deed is a conveyance of property with a valid cause or
consideration; that the consideration is the One (P1.00) Peso which is clearly stated in the deed
itself; that the apparent inadequacy is of no moment since it is the usual practice in deeds of
conveyance to place a nominal amount although there is a more valuable consideration given.
Hence, this case.

ISSUE: Whether or not One (P1.00) Peso consideration is not a consideration at all to sustain
the ruling that the Deed of Quitclaim is equivalent to a sale
HELD: The above pronouncement of respondent Appellate Court finds support in the ruling of
this Court in Morales Development Co., Inc. vs. CA, 27 SCRA 484, which states that "the major
premise thereof is based upon the fact that the consideration stated in the deeds of sale in favor
of Reyes and the Abellas is P1.00. It is not unusual, however, in deeds of conveyance adhering
to the Anglo-Saxon practice of stating that the consideration given is the sum of P1.00, although
the actual consideration may have been much more. Moreover, assuming that said
consideration of P1.00 is suspicious, this circumstance, alone, does not necessarily justify the
inference that Reyes and the Abellas were not purchasers in good faith and for value. Neither
does this inference warrant the conclusion that the sales were null and void ab initio. Indeed,
bad faith and inadequacy of the monetary consideration do not render a conveyance inexistent,
for the assignor's liberality may be sufficient cause for a valid contract (Article 1350, Civil Code),
whereas fraud or bad faith may render either rescissible or voidable, although valid until
annulled, a contract concerning an object certain entered into with a cause and with the consent
of the contracting parties, as in the case at bar."
171. Heirs of del Rosario v. Santos
L-46892, Sept. 30, 1981

FACTS: Amparo Del Rosario entered into a contract with Atty. Andres Santos and his wife
Aurora Santos whereby the latter sold to the former a 20,000 sq. m. of land which is to be
segregated from Lot 1. Said lot forms part of the several lots belonging to a certain Teofilo
Custodio, of which lots, Attorney Santos, by agreement with the latter, as his attorneys fees,
owns interests thereof. Parties agreed that spouses Santos shall thereafter execute a Deed
of Confirmation of Sale in favor of Del Rosario as soon as the title has been released and the
subdivision plan of said Lot 1 has been approved by the Land Registration Commissioner. The
spouses Santos failed, thus, Del Rosario claims malicious breach of a Deed of Sale.
Defendant thereafter filed a motion to dismiss alleging that the deed of sale was only an
accommodation graciously extended, out of close friendship between the defendants and the
plaintiff, hence, tantamount to waiver, abandonment or otherwise extinguishment of the demand
set for thin the complaint. They further alleged that the claim on which the action or suit is
founded is unenforceable under the statute of frauds and that the cause or object of the contract
did not exist at the time of the transaction. RTC ruled in favor of petitioners. Defendants
appealed.
ISSUE: Whether or not the sale is valid as to the cause or object of the contract
HELD: Yes. The Supreme Court held that the execution of the Deed of Sale is valid
notwithstanding the lack of any title to the lot by appellants at the time of execution of the Deed
of Sale in favor of appellee as there can be a sale of an expected thing in accordance with
Article 1461 of the NCC: Article 1461: Things having a potential existence may be the object of
the contract of sale. The efficacy of the sale of a mere hope of expectancy is deemed subject to

the condition that the thing will come into existence. The sale of a vain hope or expectancy is
void.
The case at bar is not a case of a vain hope or expectancy which is void under the law. The
expectant right came into existence or materialized for the appellants actually derived titles from
Lot 1 which subsequently became the object of subdivision. Moreover, when a party admits the
genuineness of a document, he also admits that the words and figures of the document are set
out correctly, and that he waives all formal requisites required by law, such as the oath,
acknowledgment, or revenue stamps.
172. Gallardo v. IAC
GR 67742, Oct. 29, 1987

FACTS: Meliton claims that on Aug. 10, 1937, Pedro sold to him (Meliton) thru an unnotarized
deed of sale, allegedly signed by Pedro, now deceased, the property in question. Based on the
private document of sale, the Original Certificate of Title was cancelled and a New Certificate of
Title issued in the name of Meliton. Because the recirds were destroyed, thru an affidavit of
reconstitution, the Register of Deeds issued the corresponding transfer certificate of title in the
name of Meliton. On Nov. 17, 1976, Marta, Pedros daughter, executed and filed an affidavit of
adverse claim with the Office of the Register of Deeds. On December 9, 1976, a deed of
conveyance and release of claim was prepared which provided that Marta is withdrawing the
adverse claim. But Marta refused to sign the affidavit of quitclaim and countered that the deed of
sale be declared null and void ab initio. The RTC declared the deed of sale of August 10, 1937
as well as the reconstituted certificate of title of Meliton void ab initio. IAC affirmed RTCs
decision.
ISSUE: Whether or not the unnotarized deed of sale purportedly executed on August 10, 1937
by the primitive owner Pedro Villanueva, in favor of petitioners, can be considered as a valid
instrument for effecting the alienation by way of sale of a parcel of land registered under the
Torrens System
HELD: The deed of sale is not registerable under the Land Registration Act. True, a private
conveyance of registered property is valid between the parties. But the only right the buyer of
registered property in a private document is to compel through court processes the seller to
execute a deed of conveyance sufficient in law for registration purposes.
Melitons reliance on Art. 1356 of the Civil Code is unfortunate. The general rule enunciated in
Art. 1356 is that contracts are obligatory, in whatever form they may have been entered,
provided all the essential requisites for their validity are present.
The next sentence provides the exception, which requires a contract to be in some form when
the law so requires for validity or enforceability. Said law in Sec. 127 of Act 496 requires that the
conveyance be executed before the judge of a court of record or clerk of a court of record or a
notary public or a justice of the peace, who shall certify such acknowledgment substantially in
form next hereinafter stated. Such law was involved here. The Register of Deeds act in

allowing the registration of the private deed of sale was authorized and did not validate the
defective private document of sale.
173. Jomoc v. CA
GR 92871, Aug. 2, 1991

FACTS: The subject lot forming part of the estate of the late Pantaleon Jomoc was fictitiously
sold and transferred to third persons. The petitioner, as administratrix of the estate and in behalf
of all the heirs, filed suit to recover the property which was decided in their favor and was
accordingly appealed by Mariano So to CA. In February 1979, pending the appeal, Jomoc
executed a Deed of Extrajudicial Settlement and Sale of Land with private respondent for
P300,000.00. The document was not yet signed by all the parties nor notarized but in the
meantime, Maura So had made partial payments amounting to P49,000.00.
In 1983, Mariano So, the appellant in the recovery proceeding, agreed to settle the case by
executing a Deed of Reconveyance of the land in favor of the heirs of Pantaleon Jomoc.
However, on February 28, 1983, the heirs of Jomoc executed another extra-judicial settlement
with absolute sale in favor of intervenors Lim Leong Kang and Lim Pue. Later, Maura So
demanded from the Jomoc family the execution of a final deed of conveyance but was ignored.
Thus, private respondent Maria So sued petitioners-heirs for specific performance to compel
them to execute and deliver the proper registrable deed of sale over the lot. It was on the same
date, February 28, 1983, allegedly upon the Jomocs' belief that Maura So had backed out from
the transaction that the Jomocs executed the other extrajudicial settlement with sale of
registered land in favor of the spouses Lim for a consideration of P200,000.00 part of which
amount was allegedly intended to be returned to Maura So as reimbursement. The spouses
Lim, however, registered their settlement and sale only on April 27, 1983.
ISSUE: Whether or not private respondent Maura So abandoned or backed out from the
agreement for the purchase of a lot belonging to the heirs of Pantaleon Jomoc, so that the
subsequent sale to petitioner spouses Lim is null and void
HELD: The Supreme Court affirmed the CAs decision and held that Lim spouses allegation
that the contract of sale by Maria Jomoc with Maura So is enforceable under the Statute of
Frauds, is without merit. Lim spouses do not deny the existence of the Extrajudicial Settlement,
including its terms and contents, notwithstanding the incompleteness in form. The meeting of
the minds and the delivery of sums as partial payment is admitted by both parties to the
agreement. Hence, there was already a valid and existing contract, not merely perfected as the
trial court saw it, but partly executed.
It is of no moment whether or not it is enforceable under the Statute of Frauds, which rule is not
applicable because of partial payment of the vendees obligation and its acceptance by the
vendors-heirs. The contract of sale of real property even if not complete in form, so long as the
essential requisites of consent of the contracting parties, object and cause of the obligation
concur and they were clearly established to be present, is valid and effective as between the
parties.

174. Fule v. CA
GR 112212, Mar. 2, 1998

FACTS: In July 1984, petitioner, as corporate secretary of the bank, asked Remelia Dichoso
and Oliva Mendoza to look for a buyer who might be interested in the Tanay property. The two
found one in the person of herein private respondent Dr. Ninevetch Cruz. It so happened that at
the time, petitioner had shown interest in buying a pair of emerald-cut diamond earrings owned
by Dr. Cruz which he had seen in January of the same year when his mother examined and
appraised them as genuine.
In the afternoon of October 23, 1984, petitioner met Atty. Belarmino at the latters residence to
prepare the documents of sale. As pre-arranged, petitioner left Atty. Belarminos residence with
Dichoso and Mendoza and headed for the bank, arriving there at past 5:00 p.m. Dr. Cruz and
the cashier then opened the safety deposit box, the former retrieving a transparent plastic or
cellophane bag with the jewelry inside and handing over the same to petitioner. The latter took
the jewelry from the bag, went near the electric light at the banks lobby, held the jewelry against
the light and examined it for ten to fifteen minutes. After a while, Dr. Cruz asked, Okay na ba
iyan? Petitioner expressed his satisfaction by nodding his head.
For services rendered, petitioner paid the agents, Dichoso and Mendoza, the amount of
US$300.00 and some pieces of jewelry. Later, at about 8:00 oclock in the evening of the same
day, petitioner arrived at the residence of Atty. Belarmino complaining that the jewelry given to
him was fake. He then used a tester to prove the alleged fakery. On October 26, 1984,
petitioner filed a complaint before the RTC against private respondents praying, among other
things, that the contract of sale over the Tanay property be declared null and void on the ground
of fraud and deceit.
ISSUE: Whether the Court of Appeals erred in upholding the validity of the contract of barter or
sale under the circumstances of this case
HELD: Article 1358, which requires the embodiment of certain contracts in a public instrument,
is only for convenience, and registration of the instrument only adversely affects third parties.
Formal requirements are for the benefit of third parties. Non-compliance therewith does not
adversely affect the validity of the contract nor the contractual rights and obligations of the
parties thereunder. It is evident from the facts of the case that there was a meeting of the minds
between petitioner and Dr. Cruz. As such, they are bound by the contract unless there are
reasons or circumstances that warrant its nullification. Hence, the problem that should be
addressed in this case is whether or not under the facts duly established herein, the contract
can be voided in accordance with law so as to compel the parties to restore to each other the
things that have been the subject of the contract with their fruits, and the price with interest.
On the other hand, there is fraud when, through the insidious words or machinations of one of
the contracting parties, the other is induced to enter into a contract which, without them, he
would not have agreed to.[24] The records, however, are bare of any evidence manifesting that
private respondents employed such insidious words or machinations to entice petitioner into

entering the contract of barter. Neither is there any evidence showing that Dr. Cruz induced
petitioner to sell his Tanay property or that she cajoled him to take the earrings in exchange for
said property. On the contrary, Dr. Cruz did not initially accede to petitioners proposal to buy
the said jewelry. Rather, it appears that it was petitioner, through his agents, who led Dr. Cruz to
believe that the Tanay property was worth exchanging for her jewelry as he represented that its
value was P400,000.00 or more than double that of the jewelry which was valued only at
P160,000.00. If indeed petitioners property was truly worth that much, it was certainly contrary
to the nature of a businessman-banker like him to have parted with his real estate for half its
price. In short, it was in fact petitioner who resorted to machinations to convince Dr. Cruz to
exchange her jewelry for the Tanay property.
175. Castillo v. Castillo
L-18238, Jan. 22, 1980
FACTS: Ysidro C. Castillo died on October 15, 1947 leaving as his heirs his wife Enriqueta
Katigbak and their nine children Intestate proceedings for the settlement of the deceased's
estate were instituted and in January, 1948, Enriqueta was appointed administratrix. On June
21, 1948, she filed an inventory of the properties as well as the obligations left by the deceased.
However, on November 11, 1948, Enriquetta submitted a project of partition, stating that the
properties which constituted the residuary hereditary estate of the deceased Ysidro are: (1) 38
parcels of land which are properties brought to the marriage by the deceased Ysidro and (2) 19
parcels of land which are conjugal properties of the spouses. Under said project of partition, all
the 38 parcels of land brought by the deceased into the marriage and 4 parcels of the conjugal
properties were adjudicated to all the nine children in equal shares, pro-indiviso; 8 parcels of the
conjugal properties were adjudicated to the widow as her share in the conjugal partnership and
the remaining 7 parcels given in usufruct to the widow. Despite approval of the project of
partition and the closing of the intestate proceedings, the properties remained under the
administration of Enriqueta.
On February 4, 1960, after an extrajudicial demand for partition failed, herein plaintiff-appellant
Zenaida K. Castillo, filed an action for partition with accounting and receivership against her
mother Enriqueta and siblings alleging that the project of partition omitted to include certain
properties acquired by the defendants using community funds in their acquisition, she prayed
that said properties be divided and partitioned accordingly.
ISSUE: Whether or not lower court erred when it held that the money used in the purchase of
1/2 of the land covered by Exhibit Plaintiff 2 below to the spouses Ysidro C. Castillo and
Enriqueta Katigbak and therefore, erred when it ordered that the same be partitioned as a
conjugal partnership property
HELD: We find no error in the lower court's ruling that the money used in the purchase of of
the land covered by Exhibit Plaintiff 2 belonged to the spouses Ysidro C. Castillo and Enriqueta
Katigbak and ordering that such land be partitioned as conjugal partnership property. We must
here underscore the specific rule in our civil law that all properties of the marriage shall be

presumed conjugal unless it be proved that they belong exclusively to either of the spouses. To
rebut or overcome this presumption, there must be clear, convincing and satisfactory proof that
this consideration of the sale was paid by only one of the spouses and from her exclusive or
separate property. The document in question, Exhibit Plaintiff 2, is a public instrument valid and
binding even as against third parties, the said deed of sale having been duly registered in the
Register of Deeds on June 23, 1947. The Register of Deeds has duly certified that said deed of
sale was duly recorded in the Registration Book under Act 3344. It needs no further
argumentation to hold that the defendants-appellants' gratuitous testimony cannot prevail over
the recitals in said public instrument, for it must be here reiterated that: A recital in a public
instrument celebrated with all the legal formalities under the safeguard of a notarial certificate is
evidence against the parties and a high degree of proof is necessary to overcome the legal
presumption that such recital is true. (Valencia v. Tantoco, et al., 99 Phil. 824).

176. SARMING VS DY GR 133643 JUNE 6, 2002

177. BA Finance Corp. v. IAC & Rene Tan
GR 76497, Jan. 20, 1993
FACTS: Private respondent applied for a loan from the petitioner using his 1975 Volkswagen
Sedan as collateral. After the loan application was approved, he received from the petitioner the
sum of 0P15,913.06 and as of June 9, 1977, he had P5,951.64 leaving a balance of P9,961.42,
exclusive of interests. In a letter dated June 7, 1977, Edmundo S. Bacay, then assistant vicepresident of the petitioner corporation demanded payment of P2,009.34 as rentals due for the
private respondent's use of the car in question, otherwise, the private respondent had to
relinquish possession of the same in favor of the petitioner. In view of the petitioner's unlawful
act of depriving him of his property without due process of law, nominal, moral and exemplary
damages are sought to be recovered by the private respondent. On the other hand, the
petitioner alleged that there was no unlawful taking of the subject car since it was the private
respondent's driver who voluntarily surrendered possession of the said car after the private
respondent failed and refused to pay the monthly rental of P991.94 for the months of April, May
and June 1977. They further claimthat the surrender of the possession of the subject car by the
private respondent to the petitioner as the legal owner thereof was pursuant to the provisions of
the Contract of Lease executed on October 25, 1976 between the petitioner corporation as
lessor and the spouses Tan as lessees.
ISSUE: Whether or not the appellate court correctly ordered the reformation of the subject lease
contract to one of simple loan with the car being posted by way of chattel mortgage
HELD: In the case at bar, there is no dispute that there was a meeting of the minds with respect
to the arrangement whereby the private respondent borrows money from the petitioner and the
subject car serves as security for the payment of the loaned amount. The private respondent
had insisted that what he merely intended in contracting with the petitioner was to secure a loan
with his Volkswagen Sedan as collateral. Upon the other hand, the petitioner, by virtue of the

private respondents loan application, prepared the necessary papers which included a Deed of
Absolute Sale of the subject car in its favor in order that its legal ownership shall serve as the
security for the repayment of the amount being loaned by the private respondent thru the
payment of monthly rentals under a Contract of Lease which the latter duly signed.
In order that an action for reformation may prosper, there must be a meeting of the minds of the
parties to a contract, but their true intention is not expressed therein by reason of mistake, fraud,
inequitable conduct or accident. Notwithstanding, the private respondent has not succeeded in
proving the above circumstances to avail of the remedy of reformation. In attempting to prove
his allegation that a contract of simple loan was intended, the private respondent pointed out the
discrepancy between the purchase price of P20,000 as indicated in the Deed of Absolute Sale
and the amount of P15,913.06 actually received by him as evidenced by a check dated Oct. 22,
1976 issued to Martina Industries by the petitioner with regard to the financing arrangement
agreed upon by them. Such discrepancy dismisses the petitioners position that he had agreed
to sell his car to the petitioner; hence, the basis for the financing lease contract as claimed by
the petitioner is not existent. For all intents and purposes, a financing lease may be seen to be
a contract sui generis, possessing some but not necessarily all of the elements of an ordinary or
civil law lease. Thus, legal title to the equipment leased is lodged in the financial lessor. The
financial lessee is entitled to the possession and use of the leased equipment. At the same time,
the financial lessee is obligated to make periodic payments denominated as lease rentals, which
enable the financial lessor to recover the purchase price of the equipment which had been paid
to the supplier thereof.

178.GSIS vs CA (GR 52478 Oct. 30, 1986)

179.UP College of Agriculture vs Gabriel (GR 70826 Oct. 12, 1987)
180.Azcona vs Jamandre (GR 30597 Jone 30, 1987)
181.Simeon del Rosario vs Shell Co. of the Phils. Ltd. (L28776 Aug. 19, 1988)
182.The Manila Banking Corporation vs Anastacio Teodoro, Jr. and Grace Anna 182.Teodoro
(GR 53955 Jan.13, 1989)
183.Lucio Tan Alim vs CA (GR 93213 Aug. 9, 1991)
184.Mojica vs CA (GR 94247 Sept. 11, 1991)
185.Republic vs Sandigan (GR 9067 Nov. 5, 1991)
186.Oil and Natural Gas Commission vs CA (GR 114323 July 23, 1998)
187.Petrophil Corp. vs CA (GR 122796 Dec. 10, 2001)
188.Aurora Capulong vs CA (L-61337 June 29, 1984)
189. WELDON CONSTRUCTION CORP. VS CA
FACTS

GR. 35721 October 12,1987

Petitioner is the contractor of a theater building whose owner is Manuel Cascio. Petitioner
demands payment of an alleged contract of supervisor of construction between the theater
owner, Manuel Casio herein private respondent and the petitioners predecessors-in-interest.
The private respondents refused to pay the amounts demanded on the ground that the Gay
Theater Building was constructed by Weldon Construction for the stipulated price of P600,000
which has already been fully paid. The irreconcilable positions takens by the parties brought the
controversy before the courts which ruled in favor of the petitioner. It ruled that the agreements
between the parties is a contract of supervision of construction and ordered the theater owner
to pay the 10% supervision fee or commission provided for in the contract. CA affirmed the
decision of the lower court.
ISSUE
Whether or not private respondent is to pay for the concession and additional fees
HELD
No. The Court finds that the agreement between the parties in the contract of construction is for
a stipulated price of work. Both parties having fully performed their reciprocal obligations is
accord with said contract, petitioner is stopped from invoking an entirely different agreement so
as to demand additional consideration. Once a contract has been consummated, there is
nothing left to be done or to be demanded by the parties thereto. All obligations arising from the
contract are extinguished. Weldon Construction assumed the obligation to construct the building
at the price fixed by the parties and to furnish both the labor and materials required for the
project.

190.NAESS SHIPPING LINES PHILS INC VS NLRC GR. NO. 73441 Sept. 4, 1987
FACTS
Pablo Dublin had been hired by NAESS Shipping Phil Inc to serve aboard MV DYUI Pacific
under an employment contract which incorporated as part thereof the special agreement
between International Workers Federation (ITF) and NAESS Shipping which binds NAESS to
pay cash benefits for loss of life of their workers to the immediate next of kin and to each
dependent child under the age of 18.
Dublin while on board the ship fatally stabbed the second cook, and to escape he jumped and
fell overboard and was never seen again after thorough search. The widow of Dublin filed a
complaint against NAESS with the POEA for the payment of death benefit as stated in the
Special Agreement. NAESS denied liability on the ground that Dublin has committed suicide
and therefore not subject for comoensation. POEA, however ruled in favor of the complainant.
NAESS filed a motion for reconsideration, which on appeal was referred and dismissed by
NLRC. Hence this petition for certiorari.
ISSUE
Whether or not death caused by suicide is compensable
HELD

YES. If the Special Agreement intended to subject NAESS liability for death benefits to any
conditions, such as one barring compensation for death whether intentional or otherwise, the
contract would have specifically provided; just as it did in incorporating the lack-of-fault proviso
in the disability benefits clause. Thus, contracts which are the private laws between the
contracting parties, should be fulfilled according to the literal sense of their stipulations if their
terms are clear and leave no room for doubts as to the intention of the contracting parties.

191. CARLOS BUNDALION vs CA, JUANITO LITTAWA and EDNA CAMCAM,

G.R. No. L-55739
June 22, 1984
FACTS
The petitioners purchased three (3) contiguous parcels of land ,which through a Deed of Sale
with Right to Repurchase, sold to the private respondents the same three contiguous parcels of
land for the same amount under specified terms and conditions which include that the
repurchase price would escalate month after month, depending on when repurchase would be
effected. It was also stipulated in the same contract that the vendor shall have the right to
possess, use, and build on, the property during the period pending redemption. The petitioners
filed a petition for declaratory relief and/or reformation of instrument before the Court of First
Instance to declare the Deed of Sale with Right to Repurchase an equitable mortgage and the
entire portion of the same deed referring to the accelerating repurchase price null and void for
being usurious. Private respondents, in turn, filed a petition for the consolidation of ownership
on the ground that "more than a year has elapsed since the execution of the Deed of Sale with
Right to Repurchase by the vendor." The private respondents contended that under the
provisions of Article 1607 in relation to Article 1616 of the New Civil Code, the vendor has lost
all his rights to avail himself of the right to consolidate ownership of the property subject of the
Deed of Sale." Petitioners filed their opposition. trial court rendered the decision in favor of the
private respondents. The petitioners appealed to the Court of Appeals which affirmed in toto the
decision of the trial court.
ISSUE
Whether or not the deed of sale with right to repurchase should be declared as an equitable
mortgage.
HELD
YES. The stipulation in the contract sharply escalating the repurchase price every month
enhances the presumption that the transaction is an equitable mortgage. Its purpose is to
secure the return of the money invested with substantial profit or interest, a common
characteristic of loans. Vendors covered by Article 1602 of the Civil Code are usually in no
position to bargain with the vendees and will sign onerous contracts to get the money they
need. The contract also provides that "it is agreed that the vendor shall have the right to
possess, use, and build on, the property during the period of redemption." When the vendee

acknowledged the right of the vendor to retain possession of the property the contract is one of
loan guaranteed by mortgage, not a conditional sale or an option to repurchase.

192. LUCIO TAN VS CA

GR NO 100942

AUGUST 12,1992

FACTS
Private respondent Sanchez invested 100,000 in Manila Bar Restaurant owned by Tiglao who
agreed that the amount would earn a profit of 4% per annum abd could be withdrawn by
Sanchez anytime. Subsequently, Tiglao assigned his rights, interests and good will over the
restaurant to the petitioned Lucio Tan. Tan executed a promissory note for the return to
Sanchez of her investment subject to the conditions that 50,000 will be paid upon signing of
contract of lease of the lot upon which the restaurant is erected, and the balance 50,000
payable on or before the expiration of the contract. After the lapse of 2 years following the
conclusion of the contract, Sanchez demanded from petitioner payment of the 50,000 which
Tan refused to pay. Petitioner argued that the ejectment case on the restaurant prevented him
from operating it, and this constitutes a fortuitous event making him not legally liable to private
respondent.
ISSUE
Whether or not the Petitioner is liable to private respondent of the 50,000 despite the
discontinued operation of the Manila Bar Restaurant
HELD
Yes. The Court stated that the provisions in the promissory note should be given a natural and
ordinary meaning which states that: Petitoner would pay private respondent the balance of
50,000 a) on or before the expiration of the 2 year period on March 6,1984; b) regardless of the
outcome of the operations of the restaurant; c) in no case beyond 2 years from March 6,1982
(date of promissory note). Neither was there a failure of considerations in the execution of the
promissory note. Tan was not executing said document because he was taking over the
management and operation of the restaurant for he had earlier acquired that right from Tiglao
under the Deed of Conveyance and Transfer. The continued operation of the restaurant is not a
suspensive condition for the obligation of the petitioner to pay the balance to Sanchez, contrary
to what the petitioner claimed. Nowhere does it say in any part of the note that its payment was
conditioned on the continued operation of the restaurant. Petition is denied.

193.FINMAN GENERAL ASSURANCE CORP VS CA GR NO 100970 Sept. 2, 1992

FACTS
On Oct. 22,1986, deceased Carlie Surposa was insured with the Petitioner, with his parents,
spouses and brothers as beneficiaries. While said insurance was in full force and effect, the
insured was killed and stabbed. Thereafter, Julia Surpoza- private respondent, filed a written
notice of claim with the petitioner which denied said claim on the ground that murder and
assault were not within the scope of the coverage of the Insurance policy. The Insurance
Commission found petitioner liable to pay complainant the proceeds of the policy. CA affirmed
this decision. Hence this petition.

ISSUE
Whether or not the term accident used in the insurance policy refer to a deliberate act such
as murder
HELD
YES. The terms accident and accidental as used in the insurance contracts have not
acquired any technical means, and as construed by the courts as an event that takes place
without ones foresight or expectation. Applying the principle of expressio uniius exclusion
alterius, since murder and assault have not been expressly included in the enumeration of the
circumstances that would negate liability in said insurance policy, it cannot be considered by
implication to discharge petitioner from liability for any injury, disability or loss suffered by the
insured. Hence petition is denied.

194. NATIONAL POWER CORP VS CA

GR 43706

NOV. 14,1986

FACTS
NPC entered into a contract with Far Eastern Electric Inc (FEEI) for the erection of
Transmission Lines for the Angat Hydroelectric Project on Dec. 26,1962. The Phil. American
Gen Insurance Co. (PHILAMGEN) issued a surety bond for the faithful performance of the
undertaking by FEEI, subject to the conditions that bonds will expire 1 year from the final
completion and acceptance and said bond will be cancelled 30 days after its expiration, unless
surety is notified of any existing obligations thereunder. In July 20,1962, PHILAMGEN and
FEEI informed NPC that FEEI was giving up the construction due to financial difficulties. NPC
thereby wrote to PHILAMGEN, formally holding the latter liable for the cost of work to be
completed plus damages. Work was completed by NPC on Sept. 30,1963 but was able to notify
PHILAMGEN of the outstanding payable balance January 30,1967. PHILAMGEN did not pay
and contended that its liability under the bond has expired Sept. 20,1964 and claimed that no
notice of any obligation of the surety was made within 30 days. Trial court ruled in favor the
NPC.
ISSUE
Whether or not PHILAMGEN is not liable to pay the surety obligations because of the failure to
file a notice of obligation within the 30-day condition
HELD
YES. PHILAMGEN is liable to pay the surety obligations. The 30-day period adverted in the
surety bond applies to the completion of the work of the contractor which was never
materialized. The surety bond must be read in its entirety and together with the contract
between NPC and contractor. It cannot be denied that the breach of contract thru abandonment
of unfinished work was within the effective date of the contract and surety bond. Such
abandonment gave rise to the continuing liability of the bond To rule that PHILAMGEN was
not notified could be a gross error.
195. PHILIPPINE AMERICAN GEN. INSURANCE CO. VS SWEET LINES INC
GR NO 87434
August 5, 1992

FACTS
A maritime suit was commenced by petitioner Philippine American General Insurance Co., Inc.
(Philamgen) and Tagum Plastics, Inc. (TPI) against private respondents Sweet Lines, Inc. (SLI) et al
, seeking recovery of the cost of lost or damaged shipment with damages, allegedly due to defendants'
negligence. A total of 7,000 bags of low density polyethylene were shipped from Baton Rouge,
LA to Manila on board a vessel belonging to the Shipping Corporation of India (SCI). From
Manila, the cargoes were shipped to Davao on board a vessel owned by Sweet Lines. The
consignee was Far East Bank to be received by Tagum Plastics. The cargoes were insured by
Far East Bank with the Philippine American General Insurance Co (Philamgen) and were
covered by bills of lading which contained the following stipulation in paragraph 5 xxxClaims for
non-delivery, misdelivery, loss or damage must be filed within 30 days from accrual. Suits
arising from shortage, damage or loss, non-delivery or misdelivery shall be instituted within 60
days from date of accrual of right of actionxxx
On May 15, 1977, the shipment(s) were discharged from the interisland carrier into the custody
of the Far East Bank. In the survey, only a total of 5,820 bags from the 7,000 bags were
delivered to the consignee in good order condition, leaving a balance of 1,080 bags. Some of
the 1,080 bags were either MISSING OR DAMAGED beyond the point of being useful for the
intended purpose.
ISSUE
1. Whether or not the existence of the so-called prescriptive period stated in the contract
constitute a valid defense.
2. Whether or not Philamgen acted within the prescriptive period

HELD
1. Yes. The prescriptive periods were valid and legal. The Sc stated that in the absence of any
statutory limitation and subject only to the requirement on the reasonableness of the stipulated
limitation period, the parties to a contract of carriage may fix by agreement a shorter time for the
bringing of suit on a claim for the loss of or damage to the shipment than that provided by the
statute of limitations. Such limitation is not contrary to public policy for it does not in any way
defeat the complete vestiture of the right to recover, but merely requires the assertion of that
right by action at an earlier period than would be necessary to defeat it through the operation of
the ordinary statute of limitations. The SC also said that, ..., the shortened period for filing suit
is not unreasonable and has in fact been generally recognized to be a valid business practice in
the shipping industry. This is in recognition of the inherent dangers of carriage by sea.
2.NO. Philamgen did not act within the prescriptive period. The shipment was discharged into
the custody of the consignee on May 15, 1977, and it was from this date that petitioners' cause
of action accrued, with thirty (30) days therefrom within which to file a claim with the carrier for
any loss or damage which may have been suffered by the cargo and thereby perfect their right
of action. Claim was filed only on April 28, 1978, way beyond the period provided in the bills of
lading and violative of the contractual provision, the inevitable consequence of which is the loss
of petitioners' remedy or right to sue. Hence , petition is denied.

196. MARIMPERIO VS CA and UNION IMPORT & EXPORT CORPORATION and

PHILIPPINES TRADERS CORPORATION
GR NO 40234 Dec. 14,1987
FACTS
Philin Traders Corporation and Union Import and Export Corporation entered into a joint
business venture for the purchase of copra from Indonesia for sale in Europe. Philin and Union
authorized Toeg to negotiate for its charter but with instructions to keep confidential the fact that
they are the real charterers. Interocean Shipping Corporation, was made to appear as charterer,
although it merely acted in behalf of the real charterers, private respondents herein entered into
an agreement with the owner, Marimperio for the hire of vessel Paxoi The Charterer was
however twice in default in its payments which were supposed to have been done in advance.
Petitioner withdrew the vessel from Charterers service and held said Charterer responsible for
unpaid hirings and all legal claims. The Charterer again remitted an amount corresponding to
the 3rd 15-day hire of the vessel PAXOI, but this time the remittance was refused. Union and
Philin filed a complaint against the Unknown Owners of the Vessel SS Paxoi, which was
amended to identify the defendant as Marimperio Compaia Naviera S.A for specific
performance with prayer for preliminary attachment. Petitioner alleged that he has no
agreement or relationship whatsoever with the respondents and are unknown to petitioner; that
the charter party entered into by petitioner with the Interocean Shipping Co. over the vessel "SS
PAXOI" does not authorize a sub-charter of said vessel to other parties; and that at any rate,
any such sub-charter was without the knowledge or consent of the petitioner or its agent, and
therefore, has no effect and/or is not binding upon the petitioner. The CFI of Manila rendered its
decision in favor of Marimperio. Union and Philin filed a Motion for Reconsideration . Acting on
the two motions for reconsideration, the trial court reversed its stand in its amended decision
a n d r u l e d i n f a v o r o f U n i o n , P h i l i n a n d I n t e r o c e a n . On Appeal, the Court of
Appeals affirmed the amended decision of the lower court except the portion granting
commission to Interocean, which it reversed thereby dism issing the complaint-inintervention. Marimperio filed with the Supreme Court its petition for review on
certiorari.
ISSUE
Whether or not respondents have the legal capacity to bring the suit for specific performance
against petitioner based on the charter party
HELD
NO. According to Article 1311 of the Civil Code, a contract takes effect between the parties who
made it, and also their assigns and heirs, except in cases where the rights and obligations
arising from the contract are not transmissible by their nature, or by stipulation or by provision of
law. Since a contract may be violated only by the parties, thereto as against each other, in an
action upon that contract, the real parties in interest, either as plaintiff or as defendant, must be
parties to said contract. Therefore, a party who has not taken part in it cannot sue or be sued for
performance or for cancellation thereof, unless he shows that he has a real interest affected
thereby. It is not the sub-lessee, but the lessor, who can bring the action. In the instant case, it
is clear that the sub-lessee or the private respondent as such cannot maintain the suit they filed
with the trial court.

197. RIVIERA FILIPINA VS CA

GR NO. 117355

April 5,2002

FACTS
Private respondent Juan Reyes executed a contract of lease with Riviera on a parcel of land.
Said lot was subject of a real estate mortgage of Reyes to Prudential Bank. Due to failure to
pay, the bank extrajudicially foreclosed the mortgage but gave Reyes until March 7,1989 to
redeem the said property. Without the capacity to redeem, Reyes offered Riviera with the right
of first refusal, to redeem the land at P5,000 per square meter. Riviera offered P4,000 per
square meter which was denied by Reyes. On Dec.2,1988 Riviera wrote Reyes confirming the
formers intent to purchase for the fixed price of 5,000 per square meter. In response, Reyes
informed Riviera that their offer was not acceptable and that they have failed to take advantage
of the opportunity , thus lost their right of first refusal to the said property. On May 1, 1989, a
Deed of Absolute Sale was executed by Reyes to Cypress and Cornhill. Riviera sought from
Reyes and Cypress a resale of said property on the ground that its right of first refusal under
the lease contract was violated.
ISSUE
Whether or not Petitioners right of first refusal was violated by the sale of the property to
another after unsuccessful negotiations for sale with the Petitioner
HELD
NO. The court held that in order to have full compliance of the contractual right granting the
petitioner the first option to purchase, the sale of property for the price for which they have been
sold to a third person should have likewise been offered to the former. There should be identity
of terms and conditions to be offered to the buyer holding a right of first refusal. However, these
general propositions do not decide for the case at bar. The court finds relevant consideration
that the intention of the parties must be given primordial consideration, and in case of death,
their contemporaneous and subsequent acts shall be principally considered. As clearly shown
by the records of the case, Reyes and Riviera interpreted the lease provision of right of first
refusal to simply mean that should lessor Reyes decide to sell the leased property during the
term of the lease, such sale should be offered to the lease. And that is what exactly ensued
between Reyes and Riviera, a series of negotiations on the price per square meter with neither
party willing to bridge from his offer as evidenced by the exchange of letters between the two
parties. Hence Rivieras right was not violated. Petition is denied.

198. Pilipinas Bank vs IAC GR NO 67881 June 30, 1987

FACTS: Hacienda Benito, Inc. as vendor, and private respondents, as vendees executed
Contract to Sell over a parcel of land on monthly installments subject to the condition: The
contract shall be considered automatically rescinded and cancelled and of no further force and
effect upon failure of the vendee to pay when due, three or more consecutive installments as
stipulated therein or to comply with any of the terms and conditions thereof
During the contract, petitioner sent series of notices to private respondents for the latters
balances. After more than two years, PR sent a letter expressing their desire to settle their
desire to fully settle their obligation. Petitioner wrote a letter to PR , informing them that the

contract to sell had been rescinded. PR filed Complaint for Specific Performance with Damages
to compel petitioner to execute a deed of sale.
After trial, the lower court rendered a decision in PRs favor, holding that petitioner could not
rescind the contract to sell, because: (a) petitioner waived the automatic rescission clause by
accepting payment and by sending letters advising private respondents of the balances due,
thus, looking forward to receiving payments thereon. Said decision was affirmed on appeal.
Hence, this Petition For Review on Certiorari,
ISSUE:
Whether or not the Contract to Sell was rescinded, under the automatic rescission clause
contained therein.
HELD:
NO, the contract cannot be rescinded. The petition is meritless because there was a clear
WAIVER of the stipulated right of automatic rescission as evidenced by the many extensions
granted private respondents by the petitioner. In all these extensions, the petitioner never called
attention to the proviso on "automatic rescission." The assailed decision is affirmed.
199.

MIAA vs. Joaquin Rodriguez

G.R. No. 161836, February28,2006

FACTS
Petitioner Manila International Airport Authority (MIAA), a GOCC operating the Ninoy
Aquino International Airport Complex, implemented expansion programs for its runway in
the 70s. So it bought and occupied some of the properties surrounding the area through
expropriation. In 1996, respondent lot owner proposed to sell to MIAA at P2,350.00 per
square meter one of the lots already occupied by the expanded runway. No deal was
made. So respondent Rodriguez bought the bigger lot, a portion of which was occupied
by the runway, as well as all the rights to claim reasonable rents and damages for the
occupation, from its owner then, Buck Estate, Inc., for P4 million.
Rodriguez demanded from the MIAA full payment for the property and back rentals for
27 years, amounting to P468.8 million. Failing to reach an agreement with MIAA,
Rodriguez filed a case for accion reinvindicatoria with damages. Finding that the MIAA
had illegally taken possession of the property, the trial court ruled respondents favor.
The Court of Appeals modified the trial courts decision, holding that Rodriguez is entitled
to back rentals only from the time he became the registered owner of the property in
1996.
ISSUE
Whether or not Rodriguez is entitled to full payment and back rentals for 27 years with damages

HELD
The petition is partly meritorious. The subject lot was occupied as a runway of the MIAA starting
in 1972. Thus, the value of the lot in 1972 should serve as the basis for the award of
compensation to the owner. MIAA occupied a portion thereof for its expanded runway where the
actual taking was made without the benefit of expropriation proceedings, and the owner sought
recovery of the possession of the property prior to the filing of expropriation proceedings,
On actual damages for the occupation of the subject lot, undeniably, MIAAs illegal occupation
for more than 20 years has resulted in pecuniary loss to Rodriguez and his predecessors-ininterest which entitles him to adequate compensation in the form of actual or compensatory
damages, on the value of the land at the time of taking, from said point up to full payment by the
MIAA. This is based on the principle that interest runs as a matter of law and follows from the
right of the landowner to be placed in as good position as money can accomplish, as of the date
of the taking. Case laws ruled that the indemnity for rentals is inconsistent with a property
owners right to be paid legal interest on the value of the property, for if the condemnor is to pay
the compensation due to the owners from the time of the actual taking of their property, the
payment of such compensation is deemed to retroact to the actual taking of the property, and
hence, there is no basis for claiming rentals from the time of actual taking.

200.
CITIBANK N.A VS. CABAMONGAN
488 SCRA 517, 2006

FACTS:
Spouses Cabamongan opened a joint and/or foreign currency time deposit in favor of
their two children with Citibank. On a material date, a person who claimed to be Carmelita
sought the pretermination of the account. She presented identification cards to ascertain her
identity to the then account officer. When she left with the money, she left an identification card.
The account officer then called up the address. The spouses and their family knew of the
incident. They were presently residing in the U.S and there was a prior incident wherein they got
robbed in their house with the jewelry box and cards stolen. Spouses made several demands
for the return of the amount but Citibank refused to do so.
ISSUE:
Whether or not the bank is guilty of negligence?
RULING:
Yes. First, the depositor did not present the Certificate of Deposit. Second, from the
internal memorandum issued by the Account Officer, he admitted to the fact that the specimen
signature was different from the one who misrepresented herself as Carmelita. Third, the bank
kept in its records pictures of its depositors. It is inconceivable how the bank was duped by an
impostor.

201.
MERCEDES CANULLAS vs. HON. WILLELMO FORTUN
GR NO. L-57499, JUNE 22, 1984

FACTS:
The petitioner Mercedes Calimlim-Canullas and Fernando Canullas were married in
1962, with 5 (five) children, and were living on a house situated on a land inherited by the latter.
In 1978, Fernando abandoned his family and lived with Corazon Daguines. In 1980, Fernando
sold the house and lot to Daguines, who initiated a complaint for quieting of title. Mercedes
resisted, claiming that the house and lot were conjugal properties, and the sale was null and
void for she had not consented thereto.
ISSUE:
Whether or not the sale of the house and lot and improvements thereon is valid?
RULING:
No. The contract of sale was null and void being contrary to morals and public policy.
The law emphatically prohibits the spouses from selling property to each other subject to certain
exceptions. Similarly, donations between spouses during marriage are prohibited.

202.
METROPOLITAN WATERWORKS & SEWERAGES SYSTEM vs. CA
GR NO. 12600 & 128520, OCTOBER 7, 1998
FACTS:
In 1965, petitioner MWSS leased around one hundred twenty eight (128) hectares of its
land to respondent CHGCCI for twenty five (25) years and renewable for another fifteen (15)
years or until the year 2005, with the stipulation allowing the latter to exercise a right of first
refusal should the subject property be made open for sale. The terms and conditions of
respondent CHGCCI's purchase thereof shall nonetheless be subject to presidential approval.
Pursuant to Letter of Instruction No. 440 issued on July 29, 1976 by then President Ferdinand
E. Marcos directing petitioner MWSS to negotiate the cancellation of the MWSS-CHGCCI lease
agreement for the disposition of the subject property, Oscar Ilustre, then General Manager of
petitioner MWSS, sometime in November of 1980 informed respondent CHGCCI, through its
president herein respondent Pablo Roman, Jr., of its preferential right to buy the subject
property which was up for sale. Validation thereof was to be made by an appraisal company of
petitioner MWSS' choice, the Asian Appraisal Co., Inc. which, on January 30, 1981, pegged a
fair market value of P40.00 per square meter or a total of P53, 800,000.00 for the subject
property. Upon being informed that petitioner MWSS and respondent CHGCCI had already
agreed in principle on the purchase of the subject property, President Marcos expressed his
approval of the sale as shown in his marginal note on the letter sent by respondents Jose Roxas
and Pablo Roman, Jr. dated December 20, 1982.

ISSUE:
Whether or not the contract which consent is vitiated by mistake, violence, intimidation,
undue influence or fraud is void?
RULING:
No. Taking such allegation to be hypothetically true, such would have resulted in
only voidable contracts because all three elements of a contract, still obtained nonetheless. The
alleged vitiation of MWSS' consent did not make the sale null and void ab initio. Thus, "a
contract where consent is given through mistake, violence, intimidation, undue influence or
fraud, is voidable. Contracts "where consent is vitiated by mistake, violence, intimidation, undue
influence or fraud" are voidable or annullable. As the contracts were voidable at the most, the
four year prescriptive period under Article 1391 of the New Civil Code will apply. This article
provides that the prescriptive period shall begin in the cases of intimidation, violence or undue
influence, from the time the defect of the consent ceases", and "in case of mistake or fraud,
from the time of the discovery of the same time.

203.
DEVELOPMENT BANK OF THE PHILIPPINES VS. CA
GR NO. L-28774, FEBRUARY 28, 1980

FACTS:
DBP bought 91,188.30 square meters of land, consisting of 159 lots, in the proposed
Diliman Estate Subdivision of the PHHC. However, the sale of the lots to DBP, Lots 2 and 4,
which form part of said 159 lots, were still sold by PHHC to the spouses Nicandro, for which 2
deeds of sale were issued to them by PHHC. Upon learning of PHHCs previous transaction
with DBP, the spouses filed a complaint against DBP and the PHHC to rescind the sale of Lots
2 and 4 by PHHC in favor of DBP. The CFI held that the sale of Lots 2 and 4, to DBP is null and
void, for being in violation of Section 13 of the DBP Charter.
ISSUE:
Whether the act of DBP in appropriating to itself CUBA's leasehold rights over the
fishpond in question without foreclosure proceedings was contrary to Article 2088 of the Civil
Code and, therefore, invalid.

RULING:
Yes. The spouses stand to be prejudiced by reason of their payment in full of the
purchase price for the same lots which had been sold to DBP by virtue of the transaction in
question. The general rule is that the action for the annulment of contracts can only be
maintained by those who are bound either principally or subsidiarily by virtue thereof. However,
a person who is not obliged principally or subsidiarily in a contract may exercise an action for
nullity of the contract if he is prejudiced in his rights with respect to one of the contracting
parties, and can show the detriment which could positively result to him from the contract in
which he had no intervention.

204.
CFI OF RIZAL & ELENA ONG ESCUTIN vs. CA & FELIX ONG
JULY 25, 1981
FACTS:
On October 20, 1977, Elena Ong Escutin, executrix of the Testate Estate of the late
Ponciano Ong Lacson, asked the probate court in Spec. Proc. No. Q-14700 of the Court of First
Instance of Rizal, Branch IX, Quezon City, for authority to sell property of the estate in order to
pay the taxes and other claims against the estate. After a cursory inquiry on the current market
value of properties within the vicinity where the property to be sold is located, the probate court,
in an order dated February 3, 1978, authorized the executrix to sell the property for not less than
P360,000.00. On February 28, 1978, the executrix sold the property to the herein intervenor,
Gan Heng, for P400, 000.00, and from this amount she paid the taxes amounting to P54,
480.28. On March 16, 1978, she submitted the Deed of Sale to the probate court for approval
and the hearing thereof was set for April 17, 1978. On April 11, 1978, however, Felix Ong filed
an opposition to the approval of the sale, alleging, among others, that he had offered to buy the
property at a higher price of P450, 000.00, which claim was denied by the executrix.
ISSUE:
Whether or not the contract of sale is valid?
RULING:
Yes. The offer of Felix Ong to buy the property at a higher price would not make the
approval of the sale a grave abuse of discretion because the difference in the prices was not the
only factor taken into consideration by the probate court in approving the sale. As the probate
court said: "The price was not at all bad and although Felix Ong and/or Manuel Ong are willing
to pay P50,000.00 more which would benefit the estate, we are not inclined to disapprove the
sale on that account alone; as otherwise, this could put the executrix in a very embarrassing
position.

205.
EARTH MINERALS EXPLORATION vs. DEPUTY EXECUTIVE SECRETARY CATALINO
MACARAIG
GR NO. 78569, FEBRUARY 11, 1991
FACTS:
Zambales Chromite, as claim-owner, on one hand, and Philzea Mining and Development
Corporation as operator, on the other, entered into a "Contract of Development, Exploitation and
Productive Operation" on the ten (10) patentable mining. During the lifetime of such contract,
Earth Minerals Exploration, Inc. submitted a Letter of Intent on June 30, 1984 to Zambales
Chromite whereby the former proposed and the latter agreed to operate the same mining area
subject of the earlier agreement between Zambales Chromite and Philzea Mining. On August
10, 1984, Zambales Chromite and Earth Minerals concretized their aforementioned Letter of
Intent when they entered into an "Operating Agreement" for the latter to operate the same
mining area. Consequently, the same mining property of Zambales Chromite became the
subject of different agreements with two separate and distinct operators. On November 29,
1984, petitioner Earth Minerals filed with the Bureau of Mines and Geo-Sciences a petition for
cancellation of the contract between Zambales Chromite and Philzea Mining, pursuant to
Section 7, P.D. 1281. In its petition, Earth Minerals alleged, among others, that Philzea Mining
committed grave and serious violations of the latter's contract with Zambales Chromite among
which are: failure to produce the agreed volume of chromite ores; failure to pay ad valorem
taxes; failure to put up assay buildings and offices, all resulting in the non-productivity and nondevelopment of the mining area.
ISSUE:
Whether or not the petitioner Earth Minerals is the proper party to seek cancellation of
the operating agreement between Philzea Mining and Zambales Chromite?
RULING:
Yes. A contract takes effect only between the parties who made it, and also their assigns
and heirs, except in cases where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law (Article 1311, New Civil
Code). Since a contract may be violated only by the parties thereto as against each other, in an
action upon that contract, the real parties in interest, either as plaintiff or as defendant must be
parties to said contract. In relation thereto, Article 1397 of the Civil Code lays the general rule
that an action for the annulment of contracts can only be maintained by those who are bound
either principally or subsidiarily by virtue thereof. The rule, however, admits of an exception.

206.
TAN QUETO VS. CA
GR NO. 35648, MAY 16, 1983
FACTS:
Restituta Tagalinar Guangco de Pombuena received the questioned lot (Lot 304-B of the
Cadastre Survey of the Municipality of Centro, Misamis Occidental) either as a purported
donation or by way of purchase on 11 February 1927 for P50.00 as the alleged consideration
thereof. The transaction took place during her mothers lifetime (her father having predeceased
the mother) and consummated while Restituta was already married to her husband Juan
Pombuena. On 22 January 1935, Juan filed an application of Torrens title over the land for
himself and his supposed co-owner Restituta. On 22 November 1938, a decision was
promulgated (GLRC 1638, Cadastral Case 12) pronouncing Juan (married to Restituto) as the
owner of the land. On 22 September 1949 a contract of lease over the lot was entered into
between Pershing Tan Queto and Restituta (with the consent of her husband) for a period of 10
years. Meanwhile, On 27 December 1960 Restituta sued Tan Queto for unlawful detainer (the
lease contract having expired) before the Municipal Court of Ozamis City. On 22 April 1962, as
a consequence of the cadastral case, an OCT was issued in Juans name. On 10 October 1962,
Tan Queto and Juan entered into a barter agreement whereby Tan Queto became the owner of
the disputed lot, and the spouses in turn became the owners of a parcel of land with the house
constructed thereon previously owned by Tan Queto. Thereafter, Tan Queto constructed on the
disputed land a concrete building, without any objection on the part of Restituta. The Municipal
court ruled in favor of the spouses in the unlawful detainer case; but on appeal in the CFI, the
entire case was dismissed because of an understanding (barter) entered into by Juan and Tan
Queto. Restituta sued both Juan and Tan Queto for reconveyance of the title over the registered
but disputed lot, for annulment of the barter, and for recovery of the land with damages.
ISSUE:
Whether or not the contract of sale is valid or not?
RULING:
The sale cannot be said to be fictitious or simulated (and therefore void) as there was a
valid consideration therefor. Assuming that there had indeed been a simulation, the parties
thereto cannot use said simulation to prejudice a stranger to said stratagem (like petitioner
herein).

207.
LEABRES VS. CA
GR

NO.

41847,

DECEMBER

12,

1986

FACTS:
Clara Tambunting de Legarda died testate on April 22, 1950. Among the properties left
by the deceased is the Legarda Tambunting Subdivision located on Rizal Avenue Extension,
Manila. Shortly after the death of said deceased, plaintiff Catalino Leabres bought, on a partial
payment of P1, 000.00 a portion (No. VIII, Lot No. 1) of the Subdivision from surviving husband
Vicente J. Legarda who acted as special administrator, the deed or receipt of said sale
appearing to be dated May 2, 1950. On August 28, 1950, the Probate Court of Manila appointed
Vicente Legarda as an administrator together with Pacifica Price and Augusto Tambunting over
the testate estate of said Clara Tambunting and authorized through its order of November 21,
1951 the sale of the property. Vicente L. Legarda was relieved as a regular Administrator and
the Philippine Trust Co. which took over as such administrator advertised the sale of the
subdivision which includes the lot subject matter herein in various issues of the Manila Times
and Daily Mirror. No adverse claim or interest over the subdivision or any portion thereof was
ever presented by any person, and in the sale that followed, the Manotok Realty, Inc. emerged
the successful bidder. By order of the Probate Court, the Philippine Trust Co. executed the
Deed of Absolute Sale of the subdivision in favor of the Manotok Realty, Inc. which deed was
judicially approved on March 20, 1959, and recorded immediately in the proper Register of
Deeds which issued the corresponding Certificates of Title to the Manotok Realty, Inc., the
defendant appellee herein. A complaint dated February 8, 1966, was filed by herein plaintiff,
which seeks, among other things, for the quieting of title over the lot subject matter herein, for
continuing possession thereof, and for damages. Leabres anchors his claim on the receipt
dated May 2, 1950, which he claims as evidence of the sale of said lot in his
favor. However, Catalino Leabres has not registered his supposed interest over the lot in the
records of the Register of Deeds, nor did he present his claim for probate in the testate
proceedings over the estate of the owner of said subdivision, in spite of the notices advertised in
the papers.
ISSUE:
Whether or not a receipt is a valid basis for a contract of sale?
RULING:

No. An examination of the receipt reveals that the same can neither be regarded as a
contract of sale or a promise to sell. There was merely an acknowledgment of the sum of one
thousand pesos (P1, 000.00). There was no agreement as to the total purchase price of the
land or to the monthly installment to be paid by the petitioner. The requisites of a valid
contract of sale namely: 1. consent or meeting of the minds of the parties; 2. determinate
subject matter/object; 3. price certain in money or its equivalent/consideration are lacking
in said receipt and therefore the sale is not valid or enforceable.
208.
BUMANLAG vs. ALZATE
GR NO. 39119, SEPTEMBER 26, 1987
FACTS:
Petitioners sued herein private respondents for partition of the lots inherited by both
parties from their deceased father; respondents however moved to dismiss on the ground that
some years before a final and executory judgment (based on a compromise agreement)
involving the same parties, same subject matter, and same causes of action had already been
rendered by a court of competent jurisdiction and that therefore the doctrine of res judicata
clearly bars the present case; petitioners contend that said judgment is void because the
compromise agreement had been signed in their behalf by their lawyer who had not been
authorized by them to enter into such agreement, consequently there can be no res judicata.
ISSUE:
Whether or not the compromise agreement is void?
RULING:
No. The compromise agreement is not void but merely unenforceable. The petitioners by
their silence for sixteen (16) years and by their overt acts of exchanging or bartering some of the
lots awarded to them with some of the lots of the private respondents have doubtless ratified the
act of their attorney. The argument that the partition in the first case was not one with metes and
bounds is bankrupt. There was such a physical and actual partition, not merely a metaphysical
one.
.209.
HEIRS OF CECILIO CLAUDEL ET. AL vs. CA
JULY 12, 1991
FACTS:
Cecilio Claudel acquired from the Bureau of Lands a parcel of land. Thirty-nine years
after his death, two branches of Cecilios family contested the ownership over the land. The
heirs of Cecilio partitioned the lot among themselves and obtained the corresponding TCTs.
Siblings of Cecilio filed a complaint for Cancellation of Titles and Reconveyance with Damages
alleging that their parents had purchased from the late Cecilio several portions of lot. They
admitted that the transaction was verbal but they were able to present the subdivision plan. The

CFI dismissed the complaint disregarding the evidence. The CA reversed the CFIs ruling
ordering the cancellation of the TCTs issued in the name of the heirs of Cecilio. As ruled by the
CA, the Statute of Frauds applies only to executor contracts and not the consummated sales as
in the case at bar where oral evidence may be admitted.
ISSUE:
Whether or not a contract of sale of land may be proven orally?
RULING:
Yes, a contract of sale of land may be proven orally subject to certain exceptions. This
case falls within the exception. The provision of the Statute of Fraud that is pertinent to the
present controversy is stated in Article 1403 of the Civil Code of the Philippines.
210.
SYQUIA vs. CA
GR NO. 61932, JUNE 30, 1987
FACTS:
Petitioner Ernesto Syquia wrote to private respondent Litton manifesting his willingness
to renew the contract of lease on the Dutch Inn Building upon its expiration. Litton, however,
refused, invoking the clear and unequivocal terms of the contract of lease, specifically the
duration thereof which allegedly does not provide for renewal or extension. Petitioner was asked
in writing to vacate the premises on or before the expiration. Having failed to do so, Litton filed
the case for ejectment. The City Court rendered a decision in favor of Litton. CA affirmed the
decision. Petitioner now alleges an oral promise or assurance of the representatives of Litton
giving him priority or renewal of the contract of lease.
ISSUE:
Whether or not the alleged oral assurance or promise is enforceable?
RULING:
No. The SC ruled that an alleged oral assurance or promise of the representatives of the
lessor that the lessee should be given priority or a renewal of the lease cannot be enforceable.
Under Article 1403, No. 2(e), of the NCC, an agreement for the leasing for a longer period than
one year is unenforceable by action unless the same, or some note or memorandum thereof, be
in writing and subscribed by the party charged, or by his agent.
211.GENARO CORDIAL, vs. DAVID MIRANDA
December 14, 2000
FACTS:
David Miranda, a businessman from Angeles City, was engaged in rattan business.
Gener Buelva was the supplier of David but the former met an accident and died. Genero
Cordial and Miranda met through Buelvas widow, Cecilla. They agreed that Cordial will be his
supplier of rattan poles. Cordial shipped rattan poles as to the agreed number of pieces and

sizes however Miranda refused to pay the cost of the rattan poles delivered. Miranda alleged
that there exist no privacy of contract between Miranda and Cordial. Cordial filed a complaint
against Miranda. The RTC rendered its decision in favor of the petitioner. The CA reversed the
decision of the RTC.
ISSUE:
Whether or not Statute of Frauds applies in this case.
RULING:
No, the CA and respondent Miranda stress the absence of a written memorandum of
the alleged contract between the parties. Respondent implicitly argues that the alleged contract
is unenforceable under the Statute of Frauds however, the statute of frauds applies only to
executor and not to completed, executed, or partially executed contracts. Thus, were one party
has performed ones obligation, oral evidence will be admitted to prove the agreement. In the
present case, it has already been established that petitioner had delivered the rattan poles to
respondent. The contract was partially executed; the Statute of Frauds does not apply.
212. Castillo vs. Castillo
Gr L-18238 Jan. 22, 1980
FACTS:
Castillo died leaving as his heirs his wife Katigbak and their nine children. Intestate
proceedings for the settlement of the deceased's estate were instituted. Katigbak was appointed
administratrix. On June 21, 1948, she filed an inventory of the properties as well as the
obligations left by the deceased. Two months thereafter, she was ordered to submit a project of
partition. On November 11, 1948, the surviving spouse as administratrix submitted a project of
partition. Despite approval of the project of partition and the closing of the intestate proceedings,
the properties remained under the administration of Enriqueta K. Vda. de Castillo. On February
4, 1960, after an extrajudicial demand for partition, herein plaintiff-appellant Zenaida, assisted
by her husband, filed an action for partition with accounting and receivership against her mother
Enriqueta Katigbak and her brothers and sisters. Alleging that the project of partition omitted to
include certain properties acquired by the defendants using community funds in their
acquisition, she prayed that said properties be divided and partitioned accordingly. Hence, this
petition.
ISSUE:
Whether or not the contention of appellant is meritorious.
HELD:
Yes, indeed, the right of plaintiff-appellant Zenaida Castillo to demand partition is
indisputable, such right being embodied in paragraph 1, Article 494 of the New Civil Code. The
finding of the trial court that the firing of the complaint in the case at bar was not malicious is a
finding of fact which is binding and conclusive upon Us, thereby negating any award of
damages against plaintiffs-appellants, following the ruling that it is not a sound policy to place a
penalty on the right to litigate and that in order that a person may be made liable to the
payment of moral damages, the law requires that his act be wrongful. The adverse result of an
action does not per se make the act wrongful and subject the actor to the payment of moral

damages. The law could not have meant to impose a penalty on the right to litigate; such right is
so precious that moral damages may not be charged on those who may exercise it erroneously.
213.Cario vs. CA
GR 47661 July 31, 1987
FACTS:
Encabo applied with the Bureau of Lands, to purchase a parcel of land which was
granted. Later an agreement of transfer was made. LTA, unaware of the transfer of rights by
Encabo to Quesada, adjudicated the lot in favor of Encabo, and LTA and Encabo signed an
Agreement to Sell. LTA later came to know about the "transfer" of rights from Encabo to
Quesada. However, before the LTA's disapproval of the transfer of Encabo's rights to Quesada,
the latter had entered into possession of the lot in question. Cario filed a petition with the LTA
seeking approval of the transfer to herein petitioners of rights to the lot in question. LTA
rendered a decision holding that the status quo should be maintained. The Carios appealed
the decision of the LTA to the Office of the President. The Carios refused to give up the
possession of the lot despite the rulings of the LTA and the Office of the President; thereafter,
the Encabos filed an action in the Court of First Instance of Manila to declare them as the
owners of the lot. After hearing and trial, the lower court rendered decision in favor of the
plaintiffs therein the Encabos. Hence, this petition.
ISSUE:
Whether or not the court erred in rendering decision in favor of respondent.
HELD:
No, the petitioners herein have nothing else to support their claim over the disputed lot
except for the Deed of Sale, Exhibit "D-1" which is even unnotarized, and the exact date of
execution, unknown. Whereas, on the other hand, the private respondents clearly have a
preponderance of evidence negating the validity of such deed. Contracts of sale are void and
produce no effect whatsoever where the price, which appears therein as paid, has in fact never
been paid by the vendee to the vendor. The Civil Code provides Art. 1409. The following
contracts are inexistent and void from the beginning: xx(2) Those which are absolutely
simulated or fictitious; xx These contracts cannot be ratified. Neither can the right to set up the
defense of illegality be waived. Furthermore, even without going into the merits and/or validity of
Exhibit "D-1", it is clear that there has been no legal transfer of rights in favor of the Carios
because neither the LTA nor the Land Authority has approved or given due course to such
transfer of rights. The LTA never waived its right to approve the transfer of rights. Since no
approval or due course has yet been given by the LTA or LA to such transfer of rights, the
document Exhibit "D-1" is not enforceable against the latter.

214.Tolentino vs Judge Edgardo L. Paras

GR 43095 May 30, 1983

FACTS:
Amado Tolentino had contracted a second marriage with private respondent while his
marriage with petitioner, Serafia G. Tolentino was still subsisting. Petitioner charged Amado with
Bigamy which Court, upon Amado's plea of guilty, sentenced him to suffer the corresponding
penalty. After Amado had served the prison sentence imposed on him, he continued to live with
private respondent until his death. His death certificate carried the entry "Name of Surviving
Spouse Maria Clemente." Petitioner sought to correct the name of the surviving spouse in the
death certificate from "Maria Clemente" to "Serafia G. Tolentino", her name. The lower Court
dismissed the petition "for lack of the proper requisites under the law". Conformably thereto,
petitioner filed the case against private respondent and the Local Civil Registrar of Paombong,
Bulacan, for her declaration as the lawful surviving spouse, and the correction of the death
certificate of Amado. In an Order, respondent Court, upon private respondent's instance,
dismissed the case, stating that the case is considered MOOT and ACADEMIC. Thus,
petitioner's present recourse mainly challenging the grounds relied upon by respondent Court in
ordering dismissal.
ISSUE:
Whether or not the court erred when it denied petitioners contention that she was the
legal wife.
HELD:
Yes, considering that Amado, upon his own plea, was convicted for Bigamy, that
sentence furnishes the necessary proof of the marital status of petitioner and the deceased.
There is no better proof of marriage than the admission by the accused of the existence of such
marriage. The second marriage that he contracted with private respondent during the lifetime of
his first spouse is null and void from the beginning and of no force and effect. It cannot be safely
concluded, then, without need of further proof nor is remand to the Court below, that private
respondent not the surviving spouse of the deceased Amado, but petitioner. Rectification of the
erroneous entry in the records of the Local Civil Registrar may, therefore, be validly made. The
court declared petitioner the surviving spouse of the deceased Amado Tolentino.

215. COMELEC vs. JUDGE MA. LUISA QUIJANO-PADILLA

September 18, 2002
G.R. No. 151992
FACTS:
In 1996, the Philippine Congress passed Republic Act No. 8189, otherwise known as the
Voter's Registration Act of 1996. Pursuant thereto, COMELEC promulgated Resolution No. 000315 approving in principle the Voter's Registration and Identification System Project (VRIS)
Project. The idea is to have a national registration of voters whereby each registrant's
fingerprints will be digitally entered into the system and upon completion of registration,
compared and matched with other entries to eliminate double entries. On September 9, 1999,
the COMELEC issued invitations to pre-qualify and bid for the supply and installations of
information technology equipment for its VRIS Project. Photokina Marketing Corporation
(PHOTOKINA) pre-qualified and eventually won. A contract was perfected between the parties,

but COMELEC failed to comply with the contract due to insufficiency of funds. Respondent filed
a suit against petitioner, of which respondent judge granted the writ of prohibitory injunction to
private respondent and denying the Omnibus Motion of petitioner. Hence, the instant petition for
certiorari filed by the Office of the Solicitor General (OSG) in behalf of then COMELEC.
ISSUE:
Whether or not the Office of the Solicitor-General has authority and/or standing to file
the petition considering that the petitioners have not been authorized by the COMELEC en banc
to take such action.
RULING:
Yes, the OSG is an independent office. In the discharge of its task, the primordial
concern of the OSG is to see to it that the best interest of the government is upheld. This is
regardless of the fact that what it perceived as the best interest of the government runs counter
to its client agencys position. In the present case, it appears that after the Solicitor General
studied the issues he found merit in the cause of the petitioner based on the applicable law and
jurisprudence. Thus, it is his duty to represent the petitioner as he did by filing this petition. He
cannot be disqualified from appearing for the petitioner even if in so doing his representation
runs against the interests of the CSC. It is in the interest of the State that questions relating to
government contracts be settled without delay. This is more so when the contract, as in this
case, involves the disbursement of public funds and the modernization of our countrys election
process, a project that has long been overdue.

216.Pilipinas Shell Petroleum Corp. vs.

Compensation Commission
GR L-41301 Dec. 15, 1986

De la Rosa and the Workmens

FACTS:
Petitioner was employed by respondent as a laborer. While in the service, petitioner
contracted illness with symptoms of gradual numbness of the body. Despite his sickness,
petitioner continued working. Notwithstanding his complaint about his illness, he was transferred
by respondent to another branch twice. While at the respondent's Depot claimant suffered a
stroke. He was given vacation leave and after the expiration, respondent separated him from
the service because of his sickness. Respondent paid him his retirement gratuity and special
benefit pursuant to its retirement plan and collective bargaining agreement and consideration of
which, petitioner signed a document entitled 'Release' including the Workmen's Compensation
Benefit to which he may be entitled under the Act. In 1970, private respondent filed a claim for
disability compensation under the Workmen's Compensation Act against the petitioner. After the
case was heard on its merits, the Regional Office rendered a decision dismissing the claim. On
May 26, 1975, private respondent filed a Motion for Reconsideration with the respondent
Commission. Finding private respondent's petition to be meritorious, the respondent
commission rendered a Decision reversing the Regional Office's decision. Hence this petition.

ISSUE:

Whether or not the respondent workmen's compensation commission erred and abused
its discretion and authority in reversing the dismissal of the claim for compensation filed by and
in awarding him disability benefits.
HELD:
Yes, as correctly pointed out by respondent Commission, "The payment made by
respondent entitled 'special payment' does not refer to disability benefits for if it did, it would
have been definitely stated. Thus, Pilipinas Shell Petroleum Corp., having failed to prove that
petitioner was paid the compensation benefits as mandated by WCA, it should be held liable
therefore, the Release document executed by private respondent being null and void. Also of
equal significance is the fact that petitioner was involuntary separated from the service. It does
not appear from the records that he was paid his separation pay pursuant to the separation pay
law which leads to the logical conclusion drawn by the respondent Commission that the special
payment stands aptly more as a consideration for his involuntary separation.
217. Abelardo Lim and Esmadito Gunnaban vs. CA
GR 125817 Jan. 16, 2002
FACTS:
Private respondent purchased a passenger jeepney from Vallarta. While private
respondent continued offering the jeepney for public transport services he did not have the
registration of the vehicle transferred in his name nor did he secure for himself a certificate of
public convenience for its operation. Thus, Vallarta remained on record as its registered owner
and operator. On 22 July 1990, while the jeepney was running, it collided with a ten-wheelertruck owned by petitioner Lim and driven by his co-petitioner Gunnaban. Gunnaban owned
responsibility for the accident. Petitioner Lim shouldered the costs for hospitalization of the
wounded, compensated the heirs of the deceased passenger. He also negotiated with private
respondent and offered to have the passenger jeepney repaired at his shop. Private
respondent however did not accept the offer so Lim offered him P20,000.00, the assessment of
the damage as estimated by his chief mechanic. The main point of contention between the
parties related to the amount of damages due private respondent. The trial court rendered a
decision in favour of private respondent. Thereafter, petitioners appealed to the Court of
Appeals which affirmed the decision of the trial court. Hence this petition.
ISSUE:
Whether or not the Court of Appeals erred in sustaining the decision of the trial court
despite their opposition to the well-established doctrine that an operator of a vehicle continues
to be its operator as long as he remains the operator of record.

HELD:
No, the kabit system is an arrangement whereby a person who has been granted a
certificate of public convenience allows other persons who own motor vehicles to operate them
under his license, sometimes for a fee or percentage of the earnings. Although the parties to
such an agreement are not outrightly penalized by law, the kabit system is invariably recognized
as being contrary to public policy and therefore void and inexistent under Art. 1409 of the Civil
Code. In the present case it is at once apparent that the evil sought to be prevented in enjoining
the kabit system does not exist. The case arose from the negligence of another vehicle. Thus it

cannot be said that private respondent Gonzales and the registered owner of the jeepney were
in estoppel for leading the public to believe that the jeepney belonged to the registered owner.
On the contrary, it was private respondent himself who had been wronged and who has the right
to proceed against petitioners for the damage caused on his passenger jeepney as well as on
his business.
218. Caram, Jr. vs Laureta
Gr L-28740 Feb. 24, 1981
FACTS:
Mata conveyed a large tract of agricultural land in favor of respondent Laureta. The
deed of absolute sale in favor of respondent was not registered because it was not
acknowledged before a notary public or any other authorized officer. Respondent occupied the
land and even paid taxes. However, the same land was sold to Caram which was legally
acknowledged. Mata admitted the existence of a private absolute deed of sale of his only
property in favor Laureta but alleging that he signed the same as he was subjected to duress,
threat and intimidation for the plaintiff was the commanding officer of the 10th division. He also
admitted the existence of sale in favour of Caram on the sale land but it was obtained through
fraud since Caram knew that he was illiterate. The trial court rendered a decision in favour of
Mata and respondent. Thereafter, Caram raised the issue to the CA which also affirmed the
lower courts decision by reason of bad faith on the part of Caram. Forthwith, Laureta filed an
action for nullity, recovery of ownership and/or reconveyance with damages against Mata and
Caram.
ISSUE:
Whether or not respondent can seek for the nullity and recovery of ownership/ or
reconveyance or the said land.
HELD:
No, since Caram was a registrant in bad faith, the situation is as if there was no
registration at all. It is true that Mata had alleged that the deed of sale in favor of Laureta was
procured by force. Such defect, however, was cured when, after the lapse of four years from the
time the intimidation ceased, Mata lost both his rights to file an action for annulment or to set up
nullity of the contract as a defense in an action to enforce the same. Further, the second sale is
not a voidable contract which provides that the action for annulment shall be brought within four
(4) years from the time of the discovery of fraud does not apply. Hence, Laureta's action could
not have prescribed since the second contract of sale, having been registered in bad faith, is
null and void. Article 1410 of the Civil Code of the Philippines provides that any action or
defense for the declaration of the inexistence of a contract does not prescribe.

219. Buenaventura vs. CA

GR 50837 Dec. 28, 1992
FACTS

Respondent spouses Leonardo Joaquin and Feliciana Landrito are the parents of
petitioners as well as of respondents, all surnamed Joaquin. Sought to be declared null and void
ab initio are six deeds of sale of real property executed by respondent parents in favor of their
respondent children and the corresponding certificates of title issued in their names.
Respondents aver that first, petitioner siblings do not have a cause of action against them as
well as the requisite standing and interest to assail their titles over the properties in litis; second,
the sales were with sufficient considerations and made by respondent parents voluntarily, in
good faith, and with full knowledge of the consequences of their deeds of sale; and third, the
certificates of title were issued with sufficient factual and legal basis. The trial court ruled in favor
of the respondents and dismissed the complaint. The Court of Appeals affirmed the decision of
the trial court. Hence, this petition.
ISSUES
1. Whether or not the Deeds of Sale are void for lack of consideration.
2. Whether or not the Deeds of Sale are void for gross inadequacy of price.
HELD
1. NO, it is not the payment of price that determines the validity of a contract of sale.
Payment of the price has nothing to do with the perfection of the contract. Payment of the price
goes into the perfection of the contract. Failure to pay the consideration is different from lack of
consideration. The former results in a right to demand the fulfillment or cancellation of the
obligation under an existing valid contract while the latter prevents the existence of a valid
contract.
2. No, petitioners failed to prove any of the instances mentioned in art. 1355 and 1470 of
the Civil Code this would invalidate, or even affect, the Deeds of Sale. Indeed, there is no
requirement that the price be equal to exact value of the subject matter of the sale. All the
respondents believed that they received the commutative value of what they gave. Moreover,
the factual findings of the appellate court are conclusive on the parties and carry greater weight
when they coincide with the factual findings of the trial court. In the instant case, the trial court
found that the lots were sold for a valid consideration, and that the defendant children actually
paid the purchase price stipulated in their respective Deeds of Sale.
220. Heirs of Ingjugtiro vs. Sps. Casals
GR 134718 Aug. 20, 2001
FACTS:
During the Second World War, Mamerto Ingjug died leaving behind the subject parcel of land to
his descendants, herein petitioners. The vendors allegedly represented to the vendees that the
property was inherited by them from the late Mamerto Ingjug, and that they were his only
surviving heirs. On 10 August 1992, herein petitioners challenged respondents' ownership of the
property against respondents. Petitioners alleged that they only discovered in 1990 that the
property had already been sold and titled to respondents, and that respondents refused, despite
repeated demands, to deliver and return to them their shares in the property.
Respondents et al, filed a motion to dismiss, instead of an answer, arguing that the complaint
failed to state a cause of action and was barred by prescription and laches. They contended that
they acquired the property in good faith. The trial court dismissed the complaint. On 26
February 1998 the Court of Appeals, affirmed the Decision of the trial court.
ISSUE:

Whether or not petitioners' right to institute a complaint for partition and reconveyance is
effectively barred by prescription and laches.
HELD:
No, in actions for reconveyance of property predicated on the fact that the conveyance
complained of was null and void ab initio, a claim of prescription of action would be
unavailing. The action or defense for the declaration of the inexistence of a contract does not
prescribe. Neither could laches be invoked in the case at bar. Laches is a doctrine in equity and
our courts are basically courts of law and not courts of equity. Equity, which has been aptly
described as "justice outside legality," should be applied only in the absence of, and never
against, statutory law. The positive mandate of Art. 1410 of the New Civil Code conferring
imprescriptibility to actions for declaration of the inexistence of a contract should pre-empt and
prevail over all abstract arguments based only on equity. Certainly, laches cannot be set up to
resist the enforcement of an imprescriptible legal right, and petitioners can validly vindicate their
inheritance despite the lapse of time.

221. Sps. Narciso Rongavilla and Dolores Rongavilla vs CA

GR 83974 Aug. 17, 1998
FACTS:
Private respondents borrowed the amount of 2, 000 from the petitioners for the purpose
of having their dilapidated rooftop repaired. A month later, petitioner visited their aunt's home,
bringing with them a document for the signature of their aunts. The document is admittedly
typewritten in English. When asked, they said that it was just a document to show that the
private respondents had a debt amounting to P2,000. On account of that representation, private
respondent signed the document. After a lapse of over four years, petitioner went to private
respondents' place and asked them to vacate the parcel in question, claiming that she and her
husband were already the new owners of the land. Surprised by this, private respondents went
to the Office of the Register of Deeds of the Province of Rizal to verify the matter. They
discovered that their Certificate of Title had been cancelled and a new one, Transfer Certificate
had been issued in favor of petitioners. It was only then that the private respondents realized
that the document they had previously been asked by their nieces to sign was a deed of sale.
Hence, respondents filed in the court which favoured them. CA also affirmed the decision.
ISSUE:
Whether or not respondent Court of Appeals commit reversible error when it upheld the trial
court's judgment that the disputed Deed of Sale is void and inexistent.

HELD:
No, in the present case, plaintiffs-appellees declared under oath in their complaint that they
signed the alleged document without knowing that said document was a deed of absolute sale.
This means that plaintiffs-appelles consent was not only vitiated, but that plaintiffs-appelles have
not give their consent at all. And since there was no consent, the deed of absolute sale is,
therefore, null and void ab initio. They never intended to sell, nor acceded to be bound by the

sale of their land. Lack of consent and consideration made the deeds of sale void altogether and
rendered them subject to attack at any time, conformably to the rule in Article 1410 that an
action to declare the inexistence of void contracts 'does not prescribe.
222. PACKAGING PRODUCTS CORPORATION and LORENZO INOCANDO, petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and BRICCIO ELERIA
G.R. No. L-50383

July 23, 1987

Facts: Defendant Briccio Eleria was removed by the management of the account of La
Tondena, Inc., he alleges that this was thru the cajolery and manipulations of Inocando. He
contends that he certainly would not have agreed to receive the amount of P5,000.00 every
month as consolation for the loss of La Tondena, Inc., account as it is an amount that pales very
much in comparison to the total income he was receiving as commissions for the La Tondena
account. The defendant charges that management is guilty of diminution of benefits and claims
that management should pay him the commissions due him from the La Tondena, Inc., and that
the management does not have a good ground to take away from him the La Tondena, Inc.,
account as there have been no complaints coming from the La Tondena people on the way he
was servicing the account.While the Petitioner, deny almost all of complainant's allegations. The
Petitioner denies the claim that he was assured and given a seven and one-half percent (71/2%) commission rate for the sales made to La Tondena, Inc., alleging that complainant was
entitled only to the regular commission of one-half percent (1/2%). The 7% commission, and
that it was actually constituted the commission rebates given by the Petitioner corporation to
certain employees of La Tondena, Inc. Petitioner maintains that the main reason why
management took away from the Defendant the La Tondena, Inc., was that they learned that
the defendant did not actually pass on the commission rebates to the La Tondena employees
and that they became more suspicious because of Defendant's high style of living and
expensive activities which suspicion was allegedly heightened when complainant refused
petitioner Inocando's offer that he (Inocando) accompany him in making the rebate payments.
Petitioner Inocando denies complainant's charges of harassment, discrimination and
humiliation, alleging that complainant actually did not object to receive the monthly income of
P5,000.00 to compensate for the loss of the La Tondena, account. He avers that the new
accounts assigned to be developed by Defendant were actually big and possessed of
tremendous potentials for expansion.
Issues: Whether or not both the petitioners and the private respondent are pari delicto with
respect to Article 1411 of civil code
Ruling: Yes, Both the petitioners and the private respondent are pari delicto with respect to
Article 1411of the civil code, because the 7% "commission rebates" are extra charges which La
Tondena top management has to bear and which it will eventually pass on to the buyers of its
products. The Bureau of Internal Revenue is cheated of sizeable amounts of taxes; hence the
arrangement is illegal and immoral. The corrupting influence affects the employees of the buyer
corporation and the officials and employees of the supplier firms who are involved in the
arrangements. And as always, it is the consuming public which ultimately suffers. The court
declaredthe agreement sought to be enforced is illegal and immoral. And Neither one of the
party may expect positive relief from courts of justice in the interpretation of their contract. The
courts leave them as they were at the time the case was filed.

223.
TEJA
MARKETING
AND/OR
ANGEL
JAUCIAN,
petitioner,
vs.
HONORABLE INTERMEDIATE APPELLATE COURT * AND PEDRO N. NALE, respondents.
G.R. No. L-65510 March 9, 1987
Facts: The defendant bought from the plaintiff a motorcycle with complete accessories and a
sidecar in the total consideration of P8,000.00. Out of the total purchase price the defendant
gave a downpayment of P1,700.00 with a promise that he would pay plaintiff the balance within
sixty days. The defendant, however, failed to comply with his promise and so upon his own
request, the period of paying the balance was extended to one year in monthly installments,
when he stopped paying anymore. The plaintiff made demands but just the same the defendant
failed to comply with the same thus forcing the plaintiff to consult a lawyer and file this action for
his damage in the amount of P546.21 for attorney's fees and P100.00 for expenses of litigation.
The plaintiff also claims that the total account of the defendant was already P2,731.06 as shown
in a statement of account. This amount includes not only the balance of P1,700.00 but an
additional 12% interest per annum on the said balance; a 2% service charge; and P 546.21
representing attorney's fees. In this particular transaction a chattel mortgage was constituted as
a security for the payment of the balance of the purchase price. It has been the practice of
financing firms that whenever there is a balance of the purchase price the registration papers of
the motor vehicle subject of the sale are not given to the buyer. The agreement also of the
parties here was for the plaintiff to undertake the yearly registration of the motorcycle with the
Land Transportation Commission. The plaintiff failed to register the motorcycle on that year on
the ground Lastly, the plaintiff explained also that though the ownership of the motorcycle was
already transferred to the defendant the vehicle was still mortgaged with the consent of the
defendant to the Rural Bank of Camaligan for the reason that all motorcycle purchased from the
plaintiff on credit was rediscounted with the bank. On his part the defendant did not dispute the
sale and the outstanding balance of P1,700. 00 still payable to the plaintiff. Because of this
failure of the plaintiff to comply with his obligation to register the motorcycle the defendant
suffered damages when he failed to claim any insurance indemnity which would amount to no
less than P15,000.00 for the more than two times that the motorcycle figured in accidents aside
from the loss of the daily income of P15.00 as boundary fee ,and when the motorcycle was
impounded.
Issue: Whether or not the agreement (kabit system) of the parties entered into is not contrary to
public policy
Ruling: No, the agreement (kabit system) of the parties entered into is contrary to public policy
and the agreement is void and in existent under Article 1409 of the Civil Code, and It is a
fundamental principle that the court will not aid either party to enforce an illegal contract, but will
leave both where it finds then. Upon this premise it would be error to accord the parties relief
from their predicament. The defect of in existence of a contract is permanent and cannot be
cured by ratification or by prescription. The mere lapse of time cannot give efficacy to contracts
that are null and void.

224.
HEIRS
OF
MARCIANA
G.
AVILA,
vs.
HON. COURT OF APPEALS, and ALADINO CH. BACARRISAS, respondents.

petitioners,

G.R. No. L-45255 November 14, 1986

Facts: The Court of First Instance of Misamis Oriental, as a cadastral court, adjudicated Lots
594 and 828 of the Cadastral Survey of Cagayan to Paz Chavez. But because Paz Chavez
failed to pay the property taxes of Lot 594, the government offered the same for sale at a public
auction. Marciana G. Avila, wife of Leonardo Avila and the mother of the herein petitioners,
participated in and won the bidding. Despite the provision of Section 579 of the Revised
Administrative Code prohibiting public school teachers from buying delinquent properties,
nobody, not even the government questioned her participation in said auction sale. In fact after
the expiration of the redemption period, the Provincial Treasurer executed in her favor the final
bill of sale. OCT Nos. 100 and 101, covering said Lots 594 and 828, were issued in favor of Paz
Chavez. In opposition thereto, private respondents filed a petition for review of the decrees at
the Court of First Instance of Misamis Oriental, Branch II, in Cadastral Case No. 17, Lot No. 594
entitled "The Director of Lands, Applicant v. Atanacia Abalde, et al., Claimants in Re: Petition for
Review of Decree, Marciana G. Avila, Petitioner vs. Paz Chavez, Respondents." After hearing
on the merits, the Cadastral Court declare the adjudicated lots in question in favor of respondent
Paz Chavez, NULL and VOID Decrees Nos. 433 and 434 issued by the Chief of Land
Registration Office
Issues: Whether or not the contract of sale is valid
Ruling: No, the contract of sale is void from the beginning, because , their mother and
predecessor-in-interest, purchased the questioned property at a public auction conducted by the
government; paid the purchase price; and was issued a final bill of sale after the expiration of
the redemption period, however undisputed that such purchase was prohibited under Section
579 of the Revised Administrative Code which provide
Section 579. Inhibition against purchase of property at tax sale.-Official and employees
of the Government of the Republic of the Philippines are prohibited from purchasing, directly or
indirectly, from the Government, any property sold by the Government for the non-payment of
any public tax. Any such purchase by a public official or employee shall be void.
Under Article 1409 of the Civil Code, a void contract is inexistent from the beginning. It cannot
be ratified neither can the right to set up the defense of its illegality be waived. Marciana Avila
was a party to an illegal transaction, and therefore, under Art. 1412 of the Civil Code, she
cannot recover what she has given by reason of the contract or ask for the fulfillment of what
has been promised her.
225.
E.
RAZON,
INC.
and
ENRIQUE
RAZON,
petitioners,
vs.
PHILIPPINE PORTS AUTHORITY, PRIMITIVO S. SOLIS, JR. and VICENTE T. SUAZO, JR.,
respondents. MARINA PORT SERVICES, INC., intervenor.
G.R. No. 75197 June 22, 1987

Facts: There was bidding for the contract to manage all the piers in South Harbor, Manila, After
a public bidding, petitioner ERI was awarded five-year contract to operate the arrastre service
for Piers 3 and 5 at the South Harbor. it allegedly invested millions of pesos in acquiring porthandling equipment upon assurance from the government that its contract would be renewed
without public bidding. Thus, when the Bureau of Customs informed petitioner ERI of its
decision to call for a new bidding and accordingly issued an invitation to bid for the operation of
the arrastre service for any and all piers in South Harbor, including Piers 3 and 5, petitioner ERI
instituted a special civil action for certiorari, prohibition, mandamus and injunction with
preliminary and mandatory injunction and/or restraining order before the then Court of First
Instance of Manila against the Secretary of Finance, Commissioner of Customs and members
of the Bidding Committee to enjoin them from proceeding with the bidding and to compel them
to renew petitioner ERI's contract. The Court of First Instance, issued the writ prayed for,
whereupon then Secretary of Finance Cesar Virata elevated the case. The Supreme Court
ordered the holding of a public bidding for all the piers, conditioned that no final award should be
given until further orders from the court.
The management contract covering all the piers in the South Harbor was executed between
petitioner ERI and the government for a term of five years, renewable for another five years. In
August of the same year, petitioner ERI increased its capitalization from P2 Million to 20 Million.
Respondent PPA informed petitioner ERI/MPSI thru a letter of even date that it was canceling
the management contract and taking over the cargo handling operations as well as the
equipment of petitioner "effective immediately"
Petitioners contend that they were denied their right to due process when respondent PPA
cancelled the Management Contract without prior hearing and investigation. In support of this
contention, they advance the theory that the management contract is not an ordinary
commercial contract, but more in the nature of a franchise or license, which, in this case, has
been impressed with property rights by reason of the length of time petitioners have been
enjoying it, and hence cannot be cancelled without according petitioners the opportunity to be
heard on the alleged complaints and contract violations. As a corollary, petitioners further assert
that respondent PPA was not exercising proprietary functions, i.e., as a party to a contract
exercising its right to rescission or resolution when it cancelled petitioners' contract, but as a
regulatory body exercising adjudicatory powers in finding and concluding that petitioner
ERI/MPSI had violated the management contract. Hence, their contention that since said
findings and conclusions were reached in violation of petitioners' right to due process, the
resultant cancellation is null and void.
Issue: whether or not the Management Contract itself is null and void under Article 1422 of the
Civil Code
Ruling: the Management Contract itself is null and void as provided in Article 1422 of the Civil
Code for Being the direct consequence and result of a previous illegal contract, and that there is
no need for judicial action for the annulment of a void contract. Any such action would be merely
declaratory. Thus, it was well within the rights of respondent PPA to unilaterally cancel and treat
as avoided the Management Contract and no arbitrariness may be attached to its exercise of
this right.

226. APOLINAR R. ROYALES and PRESENTACION GREGORIO, petitioners,

vs.
HON. INTERMEDIATE APPELLATE COURT, JOSE PLANAS, HON. J. CESAR SANGCO
etc., et al., respondents
G.R. No. L-65072 January 31, 1984
Facts: The spouses Apolinar R. Royales and Presentacion Gregorio, petitioners herein, are the
lessees of a residential house owned by respondent Jose Planas located at No. 1866 Int. I,
Oroquieta St., Manila. Planas instituted before the then City Court of Manila an ejectment suit
against petitioners, Issues having been joined, trial on the merits ensued. Respondent Planas
testified on his own behalf and was cross-examined by petitioners' counsel. When neither
petitioners nor their counsel appeared at the hearing despite due notice, the trial court ordered
the defendants and all persons holding or claiming under them to immediately vacate the house
located at No. 1866 Int. I Oroquieta Street, Sta. Cruz, Manila, subject of this action and restore
possession thereof to the plaintiff and to pay to the latter.
Issue: Whether or not a party can invoke the jurisdiction of a court to secure affirmative relief
against his opponent and, after obtaining or failing to obtain such relief, repudiate or question
that same jurisdiction
Ruling: No, the Petitioners could have prevented the trial court from exercising jurisdiction over
the case by seasonably taking exception, they instead invoked the very same jurisdiction by
filing an answer and seeking affirmative relief from it. And they participated in the trial of the
case by cross-examining respondent Planas. Upon this premise, petitioners cannot now be
allowed belatedly to adopt an inconsistent posture by attacking the jurisdiction of the court to
which they had submitted themselves voluntary. They already sleep on their right to do so. And
that it is not right for a party who has affirmed and invoked the jurisdiction of a court in a
particular matter to secure an affirmative relief, to afterwards deny that same jurisdiction to
escape a penalty.

227. RUPERTO PUREZA, petitioner, vs. THE HONORABLE COURT OF APPEALS, ASIA
TRUST DEVELOPMENT BANK and SPOUSES BONIFACIO AND CRISANTA ALEJANDRO,
respondents.
[G.R. No. 122053. May 15, 1998]
Facts: Respondent spouses Bonifacio and Crisanta Alejandro are building contractors
conducting business under the name of Boncris Trading and Builders. Petitioner Ruperto
Pureza sought their services in the construction of a two-story house at Sucat, Muntinlupa. He
applied for a Pag-Ibig Housing Loan with the Asia Trust Development Bank in the amount of
one hundred ninety-four thousand one hundred pesos (P194,100.00), signing an order of
payment authorizing the release of specified amounts to the contractor in connection with the
construction. This arrangement was embodied in a Construction Agreement entered into by the
parties, with the net proceeds of the loan amounting to one hundred fifty-five thousand, three
hundred fifty-six pesos and thirty centavos (P155,356.30). Before the completion of the project
on the spouses Alejandro informed petitioner that certain finishing works must be cancelled to
reduce costs. petitioner (as plaintiff) filed an action for Specific Performance and damages with

a Prayer for the Issuance of a Writ of Preliminary Injunction before the Regional Trial Court of
Makati, Branch 142, to prevent respondent (defendant therein) Asia Trust Development Bank
from collecting the loan or foreclosing the mortgage on plaintiff's house and lot. He claimed that
although the construction was only seventy percent (70%) finished, the Bank had released to
the spouses ninety percent (90%) of the proceeds of the loan, except for the sum of fourteen
thousand pesos (P14,000.00) which the Bank applied to amortizations. In their answer, the
defendant spouses alleged that the plaintiff and his wife Myrna authorized the release of the
proceeds of the loan on a staggered basis, in accordance with the Order of Payment. They
further state that, the plaintiff having signed a Certificate of House Completion/Acceptance, the
Bank was likewise authorized to turn the loan over to the Pag-Ibig Housing as creditor. The
lower court rendered a decision in favor of plaintiff, ordering defendant Bank to pay the sum of
forty-eight thousand pesos (P48,000.00) representing twenty-eight percent (28%) of the net
proceeds of the loan which it was found to have negligently delivered to defendant spouses.
The spouses were, in turn, ordered to reimburse the Bank the said amount. Both the Bank and
the spouses were ordered to pay to plaintiff the sum of forty thousand pesos (P40,000.00)
representing the cost of repair on the house of plaintiff where defective or inferior materials were
used; moral damages in the amount of two hundred thousand pesos (P200,000.00); exemplary
damages in the amount of fifty thousand pesos (P50,000.00); the sum of thirty thousand pesos
(P30,000.000) as attorney's fees; and the costs of suit. Defendant-appellants Asia Trust
Development Bank and spouses Alejandro appealed to the Court of Appeals, which issued a
Resolution dismissing the appeal of the latter for failure to pay docket fees and other legal
expenses.With respect to the Asia Trust Development Bank, the appealed decision was
modified dismissing the complaint against it.
Issue: Whether or not Respondent Bank and respondent spouses can be held jointly and
solidarily liable
Ruling: No, Respondent Bank and respondent spouses cannot be held jointly and solidarily
liable for the costs of repair, moral and exemplary damages, attorney's fees and the costs of
suit, Because the findings of the lower court that respondent Bank recklessly and negligently
released the proceeds of the loan to the spouses were not supported by evidence. The Bank
did nothing but fulfill its undertakings under the loan agreement in accordance with petitioner's
instructions. It cannot be charged for any damage caused upon the house of petitioner even if
such damage may be attributable to the spouses. If, indeed, repairs were necessary to improve
the physical condition of the house, respondent Bank not being the contractor thereof, cannot
be held jointly and severally liable with the spouses.
228. ADORACION E. CRUZ, THELMA DEBBIE E. CRUZ and GERRY E. CRUZ, petitioners,vs.
COURT OF APPEALS and SPOUSES ELISEO and VIRGINIA MALOLOS, respondents.
[G.R. No. 126713. July 27, 1998]
Facts: Upon the death of Delfin I. Cruz, [his] surviving spouse and children executed a notarized
Deed of Partial Partition by virtue of which each one of them was given a share of several
parcels of registered lands all situated in Taytay, Rizal.That despite the execution of this Deed
of Partial Partition and the eventual disposal or sale of their respective shares, the contracting
parties herein covenanted and agreed among themselves and by these presents do hereby bind
themselves to one another that they shall share alike and received equal shares from the
proceeds of the sale of any lot or lots allotted to and adjudicated in their individual names by
virtue of this deed of partial partition.That this Agreement shall continue to be valid and

enforceable among the contracting parties herein up to and until the last lot covered by the
Deed of [P]artial [P]artition above adverted to shall have been disposed of or sold and the
proceeds thereof equally divided and their respective shares received by each of
them.Meanwhile, the spouses Eliseo and Virginia Malolos filed Civil Case against the spouses
Nerissa Cruz-Tamayo and Nelson Tamayo for a sum of money. The Court of First Instance of
Rizal, Branch XVI (Quezon City) rendered a decision in favor of Eliseo and Virginia condemning
the spouses Nerissa and Nelson Tamayo to pay them, After the finality of that decision, a writ of
execution was issued. Enforcing said writ, the sheriff of the court levied upon the lands in
question these properties were sold in an execution sale to the highest bidders, the spouses
Eliseo and Virginia Malolos. Accordingly, the sheriff executed a Certificate of Sale over all the
rights, claims, interests, titles, shares, and participations of defendant spouses Nerissa Tamayo
and Nelson Tamayo. Nerissa Cruz Tamayo failed to exercise her right of redemption within the
statutory period and so the final deed of sale was executed by the sheriff conveying the lands in
question to spouses Eliseo and Virginia Malolos. The Malolos couple asked Nerissa Cruz
Tamayo to give them the owners duplicate copy of the seven (7) titles of the lands in question
but she refused. The couple moved the court to compel her to surrender said titles to the
Register of Deeds of Rizal for cancellation. But Nerissa was adamant. She did not comply with
the Order of the court and so the Malolos couple asked the court to declare said titles as null
and void.At this point, Adoracion Cruz, Thelma Cruz, Gerry Cruz and Arnel Cruz entered the
picture by filing is said lower court a motion for leave to intervene and oppose [the] Maloloses
motion. The Cruzes alleged that they were co-owners of Nerissa Cruz Tamayo over the lands
in question.said court issued an Order modifying the Order by directing the surrender of the
owners duplicate copies of the titles of the lands in question to the Register of Deeds not for
cancellation but for the annotation of the rights, interest acquired by the Maloloses over said
lands.
Issue: Whether or not petitioners were estopped from claiming that there was a co-ownership
over the disputed parcels of land which were also covered by the DPP
Ruling: Under the principle of estoppel, petitioners are barred from claiming co-ownership of the
lands in issue. In estoppel, a person, who by his deed or conduct has introduced another to act
in a particular manner, is barred from adopting an inconsistent position, attitude or course of
conduct that thereby causes loss or injury to another. It further bars him from denying the truth
of a fact which has, in the contemplation of law, become settled by the acts and proceedings of
judicial or legislative officers or by the act of the party himself, either by conventional writing or
by representations, express or implied or in pairs.
In their transaction with others, petitioners have declared that the other lands covered by the
same MOA are absolutely owned, without indicating the existence of a co-ownership over such
properties. Thus, they are estopped from claiming otherwise because, by their very own acts
and representations as evidenced by the deeds of mortgage and of sale, they have denied such
co-ownership.

229.
MANILA
ELECTRIC
COMPANY,
vs.
COURT OF APPEALS and PEDRO J. VELASCO, respondents.
G.R. No. L-33794 May 31, 1982

petitioner,

Facts: The respondent purchased three (3) lots from the People's Homesite and Housing
Corporation (PHHC, for short) there was a Deed of sale that was executed which provides that;
The properties herein sold and any other construction that shall be made thereon shall be used
exclusively for residential purposes and no business, industry or factory of whatever kind or
nature shall be allowed or permitted within the premises. Later on, VELASCO sold two of the
aforesaid three lots (the PROPERTY, for short) to petitioner Manila Electric Company
(MERALCO, for short), which is the public service company furnishing electric current to the
Manila area, including Quezon City. The following year, MERALCO established a substation
within the PROPERTY, the construction of which "was started in September, 1953 and was
finished the following November". On November 29, 1954, VELASCO wrote a letter to
MERALCO stating that; In mild spirit, the time has come when the undersigned is compelled to
call your attention to a previously anticipated would-be effect of your electric sub-station, in
order to avoid possible bad effects and "repercussions and complications" which might be too
late to remedy. The following year, on February 1, 1955, VELASCO filed a complaint in Civil
Case of the Court of First Instance of Rizal (the NUISANCE CASE, for short) praying that
MERALCO be ordered "to remove and abate the nuisances herein complained against," with
damages. The trial Court dismissed the complaint but, on appeal to this Court, the dismissal
was set aside and, , MERALCO was "ordered to either transfer its sub-station at South D and
South 6 Streets, Diliman, Quezon City, or take appropriate measures to reduce its noise at the
property line between the defendant company's compound and that of the plaintiff-appellant to
an average of forty (40) to fifty 50 decibels within 90 days from finality of this decision; In the
meanwhile, on November 23, 1957, VELASCO had instituted a complaint in Civil Case, the
Court of First Instance of Rizal (the CANCELLATION CASE, for short) for the rescission of the
sale of the PROPERTY to MERALCO and to collect rentals for the use and occupation of the
PROPERTY while in the latter's possession. The complaint was dismissed by the trial Court on
the ground that the NUISANCE CASE and the CANCELLATION CASE had split VELASCO'S
cause of action such that the CANCELLATION CASE was precluded from being instituted. On
appeal to the Court of Appeals, the judgment of the trial Court was reversed on the finding that
no cause of action was split, considering that abatement of nuisance was distinct and separate
from rescission of the contract of sale in favor of ME RALCO

Issue: Whether or not VELASCO can no longer cancel the contract on the alleged violation of
the condition, because he did not object to its construction
Ruling: Yes, because Even if the requirement for "residential purposes" were a condition
imposed by VELASCO himself in the contract of sale between VELASCO and MERALCO, the
former can no longer cancel the contract on the alleged violation of the condition. When
MERALCO erected the sub-station, VELASCO did not object to its construction as such. In his
letter, VELASCO merely asked for "technical assurance that your electric sub-station is not
dangerous to neighbors nor would that be a nuisance". It could not be that he did not then
realize that the sub-station was not a residence. He must have viewed it as for "residential
purposes or one year after the sub-station had been established, he "with his family tried to
tolerate (it) for a while". Actually, what was ultimately objected to by VELASCO was the noise of
the sub-station; but there was no original and timely objection to the establishment itself of the
sub-station as being not for residential purposes. If there had been no noise whatsoever from
the sub-station, no controversy would have arisen.

Contracts should be given effect as the parties construe it. "Acts done by the parties to a
contract in the course of its performance are admissible in evidence upon the question of its
meaning as being their own contemporaneous interpretation of , its terms". Thus, VELASCO
should be held as estopped from seeking cancellation of his sale of the PROPERTY to
MERALCO because the sub-station, while it was built, was considered by VELASCO as not
violative of the requirement for "residential purposes". Estoppel against VELASCO has set in.

230. SOCIAL SECURITY COMMISSION (For the Social Security System) petitioner,
vs.
PONCIANO L. ALMEDA and EUFEMIA P. ALMEDA
G.R. No. L-75428 December 14, 1988
Facts: The defendant applied for and obtained approval of a commercial loan in the amount of
THREE MILLION (P3,000,000.00) PESOS from the Social Security System (SSS) payable in
ten years (with interest) at the rate of 9% per annum and under the terms and conditions
contained in the Deed of First Mortgage executed by and between the parties. The proceeds of
the loan were to be used for the construction of a 7-storey commercial building in Pasong Tamo,
Makati, Rizal. As provided under paragraph 11 of the Deed of First Mortgage, no deviation
whatsoever from the approved plans, specifications and bill of materials shall be made without
the express and written consent of the MORTGAGEE. After receiving an initial release of
EIGHT HUNDRED EIGHTY THOUSAND (P880,000.00) PESOS, Almeda however started
construction of the proposed building on a different lot and on the basis of a revised plan without
the prior written consent of SSS. This prompted SSS to inform Almeda to 'desist from continuing
the construction based on the altered plans' and that 'should you, however, insist to proceed
with the construction of the building in accordance with the revised plans. The defendant are
requested to remit to the office SSS, Legal Department, SSS Building, East Avenue, Quezon
City, the amount of P880,000.00 plus the accrued interest thereon. Thereupon, Almeda filed
with the then Court of First Instance of Rizal a complaint for specific performance and damages,
a Civil Case.

Issue: Whether or not respondents were in estoppel

Ruling: Yes, the respondents were in estoppel, because when respondents negotiated for the
reduction of the attorney's fees, they acquiesced to the stipulation therefor and cannot now
question its validity. It is undisputed that respondents requested merely for a reduction of the
attorney's fees. In a Resolution No. 286, SSS approved respondents' request and reduced the
attorney's fees from 20% to 15% Respondents thereafter paid without protest the total obligation
including attorney's fees equivalent to 15%. The claim of respondent Ponciano Almeda that he
verbally protested the collection of attorney's fees is belied by SSS Resolution No. 286 which
shows that Almeda merely requested the reduction of attorney's fees. Between Almeda's
testimony, which is obviously self-serving, and Resolution No. 286, which is a public document,
the latter certainly carries greater probative value.

231. JOSE P. LAUREL V, in his official capacity as Provincial Governor of Batangas,

petitioner,
vs.
CIVIL SERVICE COMMISSION and LORENZO SANGALANG, respondents.
G.R. No. 71562 October 28, 1991
Facts:The private respondent Sangalang wrote a letter to the Civil Service Commission to bring
to its attention the "appointment" of Benjamin Laurel as Provincial Administrator of Batangas by
the Governor, his brother. He alleges therein that: (1) the position in question is a career
position, (2) the appointment violates civil service rules, and (3) since the Governor authorized
said appointee to receive representation allowance, he violated the Anti-Graft and Corrupt
Practices Act. He then asks that the matter be investigated.In his letter to the Chairman of the
Civil Service, Jose A. Oliveros, Acting Provincial Attorney of Batangas, for and in behalf of
herein petitioner, asserts that the latter did not violate the provision prohibiting nepotism under
Section 49 of P.D. No. 807 because, with respect to the positions of Senior Executive Assistant
and Civil Security Officer, both are primarily confidential in nature; and, with respect to the
position of Provincial Administrator:Although what was extended to Benjamin was merely a
designation and not an appointment, the Civil Service Commission ruled that "the prohibitive
mantle on nepotism would include designation, because what cannot be done directly cannot be
done indirectly." It further held that Section 24(f) of Republic Act No. 2260 provides that no
person appointed to a position in the non-competitive service (now non-career) shall perform the
duties properly belonging to any position in the competitive service (now career service). The
petitioner, therefore, could not legally and validly designate Benjamin, who successively
occupied the non-career positions of Senior Executive Assistant and Civil Security Officer, to the
position of Provincial Administrator, a career position under Section 4 of R.A. No. 5185.
Petitioner's motion to reconsider said Resolution, based on the claim that the questioned
position is primarily confidential in nature, having been denied in Resolution No. 85-271 of 3
July 1985 wherein the respondent Civil Service Commission maintains that said position is not
primarily-confidential in nature since it neither belongs to the personal staff of the Governor nor
are the duties thereof confidential in nature considering that its principal functions involve
general planning, directive and control of administrative and personnel service in the Provincial
Office

Issue: Whether or not estoppel has bound petitioner to his prior admission
Ruling: Yes, estoppel has bound petitioner to his prior admission. under Article 1431 of the Civil
Code, through estoppel an admission or representation is rendered conclusive upon the person
making it, and cannot be denied or disproved as against the person relying thereon, because
The sole ground invoked by him for exemption from the rule on nepotism is, as above indicated:
the rule does not apply to designation only to appointment. He changed his mind only after
the public respondent, in its Resolution No. 83-358, ruled that the "prohibitive mantle on
nepotism would include designation, because what cannot be done directly cannot be done
indirectly" and, more specifically, only when he filed his motion to reconsider said resolution

232. JEFFERSON LIM, petitioner, vs. QUEENSLAND TOKYO COMMODITIES, INC.,

respondent.
[G.R. No. 136031. January 4, 2002]
Facts: Petitioner Lim was then allowed to trade with respondent company which was coursed
through Shia by virtue of the blank order forms, all signed by Lim. Respondent furnished Lim
with the daily market report and statements of transactions as evidenced by the receiving forms,
some of which were received by Lim.
During the first day of trading Lim made a net profit of P6,845.57. Shia went to the office of Lim
and informed him about it. He was elated. He agreed to continue trading. During the second
day of trading or on October 23, 1992, they lost P44,465. Respondent learned that it would take
seventeen (17) days to clear the managers check given by petitioner. Hence, on October 23,
1992, at about 11:00 A.M., upon managements request, Shia returned the check to petitioner
who informed Shia that petitioner would rather replace the managers check with a travelers
check.Considering that it was 12:00 noon already, petitioner requested Shia to come back at
2:00 P.M.. Shia went with petitioner to the bank to purchase a travelers check at the PCI Bank,
Juan Luna Branch at 2:00 P.M.. Shia noticed that the travelers check was not indorsed but Lim
told Shia that Queensland could sign the indorsee portion. Because Shia trusted the latters
good credit rating, and out of ignorance, he brought the check back to the office
unsigned.Inasmuch as that was a busy Friday, the check was kept in the drawer of respondents
consultant. Later, the travelers check was deposited with Citibank.Shia informed petitioner that
they incurred a floating loss of P44,695 on October 23, 1992. He told petitioner that they could
still recover their losses. He could unlock the floating loss on Friday. By unlocking the floating
loss, the loss on a particular day is minimized.Citibank informed respondent that the travelers
check could not be cleared unless it was duly signed by Lim, the original purchaser of the
travelers check. A Miss Arajo, from the accounting staff of Queensland, returned the check to
Lim for his signature, but the latter, aware of his P44,465 loss, demanded for a liquidation of his
account and said he would get back what was left of his investment.Meanwhile, Lim signed only
one portion of the travelers check, leaving the other half blank. He then kept it. Arajo went back
to the office without it.
Respondent asked Shia to talk to petitioner for a settlement of his account but petitioner refused
to talk with Shia. Shia made follow-ups for more than a week. Because petitioner disregarded
this request, respondent was compelled to engage the services of a lawyer, who sent a demand
letter to petitioner. This letter went unheeded. Thus, respondent filed a complaint against
petitioner.

Issue: Whether or not petitioner is estopped from impugning the validity of the Customers
Agreement
Ruling: Yes, The petitioner is estopped from impugning the validity of the Customers
Agreement. For a party to a contract cannot deny the validity thereof after enjoying its benefits
without outrage to ones sense of justice and fairness, because knowing fully well the nature of
the contract he was entering into. The Customers Agreement was duly notarized and as a

public document it is evidence of the fact, which gave rise to its execution and of the date of the
latter. Next, petitioner paid his investment deposit to respondent in the form of a managers
check in the amount of US$5,000 as evidenced by PCI Bank Managers Check No. 69007,
dated October 22, 1992.All these are indicia that petitioner treated the Customers Agreement
as a valid and binding contract. And also, on the part of petitioner there was misrepresentation
of facts. He replaced the managers check with an unendorsed travelers check, instead of
cash, while assuring Shia that respondent Queensland could sign the indorsee portion thereof.
As it turned out, Citibank informed respondent that only the original purchaser (i.e. the
petitioner) could sign said check. When the check was returned to petitioner for his signature,
he refused to sign. Then, as petitioner himself admitted in his Memorandum, he used the
travelers check for his travel expenses.More significantly, petitioner already availed himself of
the benefits of the Customers Agreement whose validity he now impugns. As found by the CA,
even before petitioners initial marginal deposit (in the form of the PCI managers check dated
October 22, 1992) was converted into cash, he already started trading on October 22, 1992,
thereby making a net profit of P6,845.57.

233. Makati Leasing vs. Wearever Textile

(GR 58469 May 16, 1983)
Facts:
Wearever Textile Mills, Inc. discounted and assigned several receivables with Makati
Leasing and Financial Corp. under a Receivable Purchase Agreement so that the latter would
lend money to the former. In order to secure the collection of the receivables assigned,
Wearever executed a Chattel Mortgage over certain raw materials inventory as well as a
machinery (Artos Aero Dryer Stentering Range). Upon default of Wearever in paying what is
due, Makati Leasing filed a petition for extrajudicial foreclosure of the properties mortgaged to it.
Enforcing then the writ of seizure issued by the lower court, the Sheriff removed the main drive
motor of the machinery. Upon appeal, CA reversed the ruling of the RTC and ordered the return
of the motor to Wearever since the said machinery cannot be the subject of a replevin and
chattel mortgage for it is a real property pursuant to Art. 415 (3) of the NCC. CA argued that the
machinery is attached to the ground by means of bolts and the only way to remove it from the
respondents plant would be to drill out or destroy the concrete floor which is why all that the
sheriff could do to enforce the writ was to take the main drive motor of the machinery.
Issue:
Whether the machinery is a personal property.
Held:

Yes. By destination, it is a real property but by virtue of the intention of the parties
stipulated in their chattel mortgage contract, the machinery was intended to be a personal
property. The Court made reference to its ruling in Tumalad v. Vicencio and Standard Oil Co. of
New York v. Jaramillo where it held that a real property may be considered as a personal
property for purposes of executing a chattel mortgage thereon as long as the parties to the
contract so agree and no innocent third party will be prejudiced thereby, and once the parties so
agreed, they are already stopped from claiming otherwise. Private respondent contended that
its characterization of the subject machinery as chattel in their agreement should not be
appreciated against it because it had never represented nor agreed in such as it was merely
required and dictated on by the petitioner to sign a chattel mortgage in blank form. The Court
was not persuaded by its contention as the said issue was not duly raised in the lower and
appellate courts nor will the said signing in blank by the respondent make the contract void but
merely voidable by a proper action in court. Furthermore as it was undeniable that it benefited
from the chattel mortgage, it cannot be allowed to impugn its efficacy for equity reasons.

234. Carolina Liquete Ganzon vs CA (GR 136831 July 30, 2002)

Facts:
Plaintiff is the registered owner of a parcel of land situated in Balasa, Iloilo, covered by
TCT Nos. T-48983, and another lot covered by TD No. 0085;that on March 11, 1974, plaintiff
and defendant Florisco Banhaw entered into a contract of lease on said lot for a term of three
(3) years, commencing from the crop year 1974-1975 up to and including the crop year 19761977; that it is provided in the contract of lease that defendant Banhaw cannot sub-lease the
subject land; that the term of the lease has already expired without defendant returning
possession thereof, and that it was later discovered that defendant sub-leased the property to
the other defendants; that, despite demands, defendants refused to vacate the property. Thus,
plaintiff prayed that judgment be rendered ordering defendants to vacate the property.
Issue:
Whether or not the Contarct of lease is valid.
Held:
It was established that the agreement entered into between Florisco Banhaw and
Carolina L. Ganzon is one of a civil law lease. As such civil law lessee, Banhaw who was in
legal possession of the questioned landholdings may institute tenants thereon. However, the
record of this case is bereft of any credible and substantial evidence to prove that the other
defendants herein allegedly instituted as tenants by Florisco Banhaw are sharing or paying

rentals to him or to the landowner. Mere allegations without the corresponding receipts would
not sufficiently establish tenancy relationship especially since there was an express prohibition
in the civil law lease contract to sub-lease the subject land to any other person.
This Court has laid down the rule that in order for a tenancy relationship to exist, these
elements must be present:
(1) That the parties are the landowner and the tenant or agricultural lessee;
(2) that the subject matter of the relationship is an agricultural land;
(3) that there is consent between the parties to the relationship;
(4) that the purpose of the relationship is to bring about agricultural production;
(5) that there is personal cultivation on the part of the tenant or agricultural lessee; and
(6) that the harvest is shared between the landowner and the tenant or agricultural
lessee.
Respondent Florisco Banhaw was not instituted as an agricultural lessee but, rather, as civil law
lessee of the land. Neither were the other private respondents, Rolando Banhaw, Honorato
Banhaw, Igmedio Pama, et al., so installed by the landowner as tenants. The DAR itself, in its
ORDER of 14 August 1991, confirmed that respondents could not be installed agricultural
lessees by Florisco Banhaw himself since they were members of his (Florisco) immediate farm
household.
235. Nyco Sales Corp. vs BA Finance Corp. (GR 71694 Aug. 16, 1991)
Facts:
Nyco Sales Corporation whose president and general manager is Rufino Yao, is engaged in the
business of selling construction materials. Sometime in 1978, the brothers Santiago and Renato
Fernandez both acting in behalf of Sanshell Corporation, approached Rufino Yao for credit
accommodation. They requested Nyco, thru Yao, to grant Sanshell discounting privileges which
Nyco had with BA Finance Corporation .Yao apparently acquiesced, hence on or about
November 15, 1978, the Fernandezes went to Yao for the purpose of discounting Sanshell's
post-dated check which was a BPI-Davao Branch for the amount of P60,000.00. The said check
was payable to Nyco. Following the discounting process agreed upon, Nyco, thru Yao,
endorsed the check in favor of BA Finance. Thereafter, BA Finance issued a check payable to
Nyco which endorsed it in favor of Sanshell. Sanshell then made use of and/or negotiated the
check. Accompanying the exchange of checks was a Deed of Assignment executed by Nyco in
favor of BA Finance with the conformity of Sanshell. Nyco was represented by Rufino Yao, while
Sanshell was represented by the Fernandez brothers. Under the said Deed, the subject of the
discounting was the aforecited check .At the back thereof and of every deed of assignment was
the Continuing Suretyship Agreement whereby the Fernandezes unconditionally guaranteed to
BA Finance the full, faithful and prompt payment and discharge of any and all indebtedness of
Nyco.
Issue:

whether or not the assignor is liable to its assignee for its dishonored checks
Held:
An assignment of credit is the process of transferring the right of the assignor to the assignee,
who would then be allowed to proceed against the debtor. It may be done either gratuitously or
generously, in which case, the assignment has an effect similar to that of a sale.
According to Article 1628 of the Civil Code, the assignor-vendor warrants both the credit itself
(its existence and legality) and the person of the debtor (his solvency), if so stipulated, as in the
case at bar. Consequently, if there be any breach of the above warranties, the assignor-vendor
should be held answerable therefor. There is no question then that the assignor-vendor is
indeed liable for the invalidity of whatever he as signed to the assignee-vendee.

236.Abines vs BPI (482 SCRA 421)

Facts:
BPI alleged in the complaint that on April 23, 1999 and May 26, 2000, petitioners obtained from
respondents BPI and BPI Family Bank a loan in the amount of P22,935,200.00 and
P23,162,959.42, respectively, as evidenced by BPI Promissory Note Nos. 5012531-00 and
1120000014, and secured by two deeds of real estate mortgage. When the petitioners defaulted
on their loan payments, the mortgaged properties were extrajudicially foreclosed and sold at
public auction where BPI emerged as the highest bidder. The bid price of P35,730,184.00,
however, did not cover the total amount owed by petitioners to respondents, hence, BPI sought
the collection of the deficiency amount plus interest.
On the other hand, petitioners filed on May 13, 2002, a complaint against respondents for
accounting in order to determine the correct amount of principal and outstanding obligations,
annulment of foreclosure, annulment or reformation of documents, annulment of registration of
certificate of sale, redemption, specific performance, injunction, and damages, with an
application for preliminary injunction before the RTC of Cebu City, which was docketed as Civil
Case No. 27700 (REFORMATION CASE).
Issue:
Whether or not the collection of money by BPI correct.
Held:
The COLLECTION CASE should subsist because it is the first action filed and the more
appropriate vehicle for litigating all the issues in controversy. In the REFORMATION CASE,
petitioners acknowledge their indebtedness to respondents but they contest the amounts of the
principal, interest and the remaining balance. Clearly, these claims are in the nature of defenses
to the COLLECTION CASE and should be asserted in that case and not in a separate action.
Accordingly, the subject REFORMATION CASE should be dismissed on the ground of litis
pendentia.
Finally, it may not be amiss to point out that on May 17, 2004, while the instant case was
pending before the Court of Appeals, the trial court rendered a decision in the COLLECTION
CASE finding petitioners liable to respondents for a deficiency sum of P19,227,174.53.19 In that

case, the issues with respect to the validity and enforceability of the promissory notes and real
estate mortgages as well as the validity of the foreclosure proceedings were valid.

237. Prudential Bank vs Panis (GR 50008 Aug. 31, 1987)

FACTS:
Spouses Magcale secured a loan from Prudential Bank.
To secure payment, they
executed a real estate mortgage over a residential building. The mortgage included also the
right to occupy the lot and the information about the sales patent applied for by the spouses for
the lot to which the building stood. After securing the first loan, the spouses secured another
from the same bank. To secure payment, another real estate mortgage was executed over
the same properties.The Secretary of Agriculture then issued a Miscellaneous Sales Patent
over the land which was later on mortgaged to the bank.The spouses then failed to pay for the
loan and the REM was extrajudicially foreclosed and sold in public auction despite opposition
from the spouses. The respondent court held that the REM was null and void.

HELD:
A real estate mortgage can be constituted on the building erected on the land belonging to
another. The inclusion of building distinct and separate from the land in the Civil Code
can only mean that the building itself is an immovable property. While it is true that a mortgage
of land necessarily includes in the absence of stipulation of the improvements thereon,
buildings, still a building in itself may be mortgaged by itself apart from the land on which it is
built. Such a mortgage would still be considered as a REM for the building would still be
considered as immovable property even if dealt with separately and apart from the land. The
original mortgage on the building and right to occupancy of the land was executed before the
issuance of the sales patent and before the government was divested of title to the
land.
Under the foregoing, it is evident that the mortgage executed by private
respondent on his own building was a valid mortgage. As to the second mortgage, it was done
after the sales patent was issued and thus prohibits pertinent provisions of the Public Land Act.

238. Mendoza vs CA (GR 116710 June 25, 2001)

Facts:
In 1964, it was proven that a parcel of land located in Sta. Maria, Bulacan, is owned by
Mendoza. Mendoza applied for a title. During pendency of the application before the land
registration court, Mendoza sold the land to Daniel Cruz. The contract of sale was admitted in
court in lieu of the pending application for land title. The registration court rendered a decision in
July 1965, ordering the registration of the two parcels of land in the name of Cruz subject to the
usufructuary rights of Mendoza.
The decision became final and executory. In 1968, however, upon failure of Cruz to pay
Mendoza, Mendoza petitioned that the title issued in the name of Cruz be cancelled. The land
registration court ruled in favor of Mendoza on the ground that the court erred in its earlier

decision in issuing the land title to Cruz who was not a party to the application of title initiated
by Mendoza. Cruz appealed. The Court of Appeals ruled in favor of Cruz.
ISSUE:
Whether or not the contract of sale is valid.
HELD:
First of all, it was proven that Mendoza caused the registration in the name of Cruz
pursuant to their contract of sale. Second, Mendoza overlooks Section 29 of the Land
Registration Act which expressly authorizes the registration of the land subject matter of a
registration proceeding in the name of the buyer (Cruz) or of the person to whom the land has
been conveyed by an instrument executed during the interval of time between the filing of the
application for registration and the issuance of the decree of title. SEC. 29. After the filing of the
application and before the issuance of the decree of title by the Chief of the General Land
Registration Office, the land therein described may be dealt with and instruments relating
thereto shall be recorded in the office of the register of deeds at any time before issuance of the
decree of title, in the same manner as if no application had been made. The interested party
may, however, present such instruments to the Court of First Instance instead of presenting
them to the office of the register of deeds, together with a motion that the same be considered in
relation with the application, and the court after notice to the parties, shall order such land
registered subject to the encumbrance created by a said instruments, or order the decree of
registration issued in the name of the buyer or of the person to whom the property has been
conveyed by said instruments. . . .
A stranger or a third party may be dealt with in the land registration proceedings. The only
requirements of the law are: (1) that the instrument be presented to the court by the interested
party together with a motion that the same be considered in relation with the application; and (2)
that prior notice be given to the parties to the case. And the peculiar facts and circumstances
obtaining in this case show that these requirements have been complied with in this case.

239. Litonjua Jr. vs Eternit Corp. (490 SCRA204)

Facts:
The Eternit Corporation owned by Eteroutremer S.A. Corporation (ESAC), a corporation
registered under the laws of Belgium. Glanville was the General Manager and President of EC,
while Delsaux was the Regional Director for Asia of ESAC. They engaged the services of
realtor/broker Lauro G. Marquez. Marquez thereafter offered the land to Eduardo B. Litonjua, Jr.
forP27,000,000.00. Litonjua counter offered P20,000,000.00 cash. Marquez apprised Glanville
& Delsaux of the offer. Delsaux sent a telex stating that, based on the "Belgian/Swiss decision,"
the final offer was "US$1,000,000.00 andP2,500,000.00. The Litonjua brothers deposited
US$1,000,000.00 with the Security Bank & Trust Company, and drafted an Escrow Agreement
to expedite the sale. Meanwhile, with the assumption of Corazon C. Aquino as President, the

political situation improved. Marquez received a letter from Delsaux that the ESAC Regional
Office decided not to proceed with the sale. When informed of this, the Litonjuas, filed a
complaint for specific performance and payment for damages on account of the aborted sale.
Issue:
WON the appellate court committed grave error of law in holding that Marquez needed a written
authority from respondent ETERNIT before the sale can be perfected.
Held:
A corporation is a juridical person separate and distinct from its stockholders and is not affected
by the personal rights, obligations and transactions of the latter. It may act only through its
board of directors or, when authorized by its board resolution, through its officers or agents. The
general principles of agency govern the relation between the corporation and its officers or
agents, subject to the articles of incorporation, by-laws, or relevant provisions of law. Agency
may be oral unless the law requires a specific form. However, to create or convey real rights
over immovable property, a special power of attorney is necessary. Thus, when a sale of a
piece of land or any portion thereof is through an agent, the authority of the latter shall be in
writing, otherwise, the sale shall be void. In this case, the petitioners failed to adduce in
evidence any resolution of the Board of Directors of EC empowering Marquez, Glanville or
Delsaux as its agents, to sell, let alone offer for sale, for and in its behalf, the eight parcels of
land owned by it,therefore the sale is invalid.

240. Gelano vs CA (L-39050 Feb. 24, 1981)

Facts:
Private respondent Insular Sawmill, Inc. is a corporation organized on September 17,
1945 with a corporate life of fifty (50) years, or up to September 17, 1995, with the primary
purpose of carrying on a general lumber and sawmill business. To carry on this business,
private respondent leased the paraphernal property of petitioner-wife Guillermina M. Gelano at
the corner of Canonigo and Otis, Paco, Manila for P1,200.00 a month. It was while private
respondent was leasing the aforesaid property that its officers and directors had come to know
petitioner-husband Carlos Gelano who received from the corporation cash advances on account
of rentals to be paid by the corporation on the land. Petitioner Carlos Gelano obtained from
private respondent cash advances of P25,950.00. The said sum was taken and received by
petitioner Carlos Gelano on the agreement that private respondent could deduct the same from
the monthly rentals of the leased premises until said cash advances are fully paid. Out of the
aforementioned cash advances in the total sum of P25,950.00, petitioner Carlos Gelano was
able to pay only P5,950.00 thereby leaving an unpaid balance of P20,000.00 which he refused
to pay despite repeated demands by private respondent. Petitioner Guillermina M. Gelano
refused to pay on the ground that said amount was for the personal account of her husband
asked for by, and given to him, without her knowledge and consent and did not benefit the
family.

Issue:
Whether or not Guillermina M. Gelano is liable for the debt of her husband Carlos
Gelano.
Held:
Petitioners contend that the obligations contracted by petitioner Carlos Gelano from
November 19, 1947 until August 18, 1950 (before the effectivity of the New Civil Code) and from
December 26, 1950 until July 14, 1952 (during the effectivity of the New Civil Code) were his
personal obligations, hence, petitioners should not be held jointly and severally liable. As
regards the said issues, suffice it to say that with the findings of the Court of Appeals that the
obligation contracted by petitioner-husband Carlos Gelano redounded to the benefit of the
family, the inevitable conclusion is that the conjugal property is liable for his debt pursuant to
paragraph 1, Article 1408, Civil Code of 1889 9 which provision incidentally can still be found in
paragraph 1, Article 161 of the New Civil Code. 10 Only the conjugal partnership is liable, not
joint and several as erroneously described by the Court of Appeals, the conjugal partnership
being only a single entity.
241. Victorias vs Leuenberger and CA (GR 31189 March 31, 1989)
Facts:
Respondent Norma Leuenberger, married to Francisco Soliva, inherited the whole of Lot
No. 140 from her grandmother, Simeona J. Vda. de Ditching (not from her predeceased mother
Isabel Ditching). In 1952, she donated a portion of Lot No. 140, about 3 ha., to the municipality
for the ground of a certain high school and had 4 ha. converted into a subdivision.
In 1963, she had the remaining 21 ha. or 208.157 sq. m. relocated by a surveyor upon
request of lessee Ramon Jover who complained of being prohibited by municipal officials from
cultivating the land. It was then that she discovered that the parcel of land, more or less 4 ha. or
33,747 sq.m. used by Petitioner Municipality of Victorias, as a cemetery from 1934, is within her
property.
Issue:
Whether or not Norma Leuenberger and Francisco Soliva are the lawful owners of the
land in litigation
Held:
It is expressly provided by law that the thing sold shall be understood as delivered, when
it is placed in the control and possession of the vendee. (Civil Code Art. 1497). Where there is
no express provision that title shall not pass until payment of the price, and the thing gold has
been delivered, title passes from the moment the thing sold is placed in the possession and
control of the buyer. Delivery produces its natural effects in law, the principal and most
important of which being the conveyance of ownership, without prejudice to the right of the
vendor to payment of the price.

Similarly, when the sale is made through a public instrument, the execution thereof shall be
equivalent to the delivery of the thing which is the object of the contract, if from the deed, the
contrary does not appear or cannot be clearly inferred. (Civil Code Art. 1498). The execution of
the public instrument operates as a formal or symbolic delivery of the property sold and
authorizes the buyer to use the document as proof of ownership.
In the case at bar it is undisputed that petitioner had been in open, public, adverse and
continuous possession of the land for a period of more than thirty years. In fact, according to the
municipal treasurer there are over 1000 graves in the cemetery, therefore it is the Municipality of
Victorias that has the right over the disputed property.

242.South City Homes, Inc. Fortune Motors (Phils.), Palawan Lumber Manufacturing
Corp. vs BA Finance Corp. (GR 135462 Dec. 7, 2001)
Facts:
Prior to the transactions covered by the subject drafts and trust receipts, defendantappellant Fortune Motors Corporation (Phils.) has been availing of the credit facilities of plaintiffappellant BA Finance Corporation. On January 17, 1983, Joseph L. G. Chua, President of
Fortune Motors Corporation, executed in favor of plaintiff-appellant a Continuing Suretyship
Agreement, in which he jointly and severally unconditionally guaranteed the full, faithful and
prompt payment and discharge of any and all indebtedness of Fortune Motors Corporation to
BA Finance Corporation.
Issue:
Whether there was a novation of the obligation so as to extinguish the liability of the
sureties.
Held:
Petitioners assert that the suretyship agreement they signed is void because there was
no principal obligation at the time of signing as the principal obligation was signed six (6)
months later. The Civil Code, however, allows a suretyship agreement to secure future loans
even if the amount is not yet known.Article 2053 of the Civil Code provides that:
Art. 2053 A guaranty may also be given as security for future debts, the amount of which is
not yet known. x x x
Moreover,an assignment of credit is an agreement by virtue of which the owner of a credit,
known as the assignor, by a legal cause, such as sale, dacion en pago, exchange or donation,

and without the consent of the debtor, transfers his credit and accessory rights to another,
known as the assignee, who acquires the power to enforce it to the same extent as the assignor
could enforce it against the debtor.[7] As a consequence, the third party steps into the shoes of
the original creditor as subrogee of the latter. Petitioners obligations were not extinguished.
Thus:
x x x Moreover, in assignment, the debtors consent is not essential for the validity of the
assignment (Art. 1624 in relation to Art. 1475, Civil Code), his knowledge thereof affecting only
the validity of the payment he might make (Article 1626, Civil Code).
Article 1626 also shows that payment of an obligation which is already existing does not
depend on the consent of the debtor. It, in effect, mandates that such payment of the existing
obligation shall already be made to the new creditor from the time the debtor acquires
knowledge of the assignment of the obligation. The law is clear that the debtor had the
obligation to pay and should have paid from the date of notice whether or not he consented.

243.Mariano vs Judge De Vera (GR 59974 March 9, 1987)

CANT BE FOUND. ILL JUST LOOK IT UP IN THE SCRA :0

244. TIBURCIO SAMONTE v CA. et.al

G.R.NO. 1042223; July 12. 2001
FACTS:
Petitioner, as successor in interest of the Jadol spouses argues that respondents action for
reconveyance, filed only in 1975, had long prescribed considering that the Jadol spouses
caused the registration of portion of the subject lot in their names way back in August 8, 1957. It
is petitioners contension that since 18 years had already lapsed from the issuance of the
transfer certificate of title until the time when respondents filed the action in the court a quo in
1975, the same was it me barred. As it has been indubitably established that fraud attended the
registration of a portion of the subject property, the Jadol spouses were trustees thereof, on
behalf of the surviving heirs of Abao. An action based on implied or constructive trust prescribes
in 10 years from the time of its creation or upon the alleged fraudulent registration of the
property.

ISSUE: Whether or not the action for reconveyance had already prescribed

HELD: No. Petitioners defense of prescription is untenable. The general rule that the discovery
of fraud is deemed to have taken place upon the discovery of fraud is deemed to have taken
place upon registration of real property because it is considered a constructive notice to all
persons does not apply in this case. Instead CA correctly applied the ruling in Adille v CA,
apropos to the instant case, thus It is true that the registration under the Torrens system is
constructive notice of title, but it has likewise been our holding that the Torrens title does not
furnish a shield Por Fraud. It is, therefore, no argument to say that the act of registration is
equivalent to notice of repudiation, assuming there was one, not with understanding the long
standing rule that the registration operates as universal notice of title. In Adille, petitioner
therein executed a deed of extrajudicial partition misrepresenting himself to be the sole heir of
his mother when, in fact, she had of her children. As a consequence, petitioner therein was able
to secure title to the land in his name alone his siblings hen filed a case petitioner was only a
trustee on an implied trust of the property. Among the issues resolved by the court in that case
was prescription. Said petitioner registered the property in 1955 and the claim of private
respondents therein was prescribed in 1974. Thus in citing Adille, the SC said that in the in
instant case the CA rightfully ruled that respondents action for reconveyance had not yet
prescribed.

245. NO DIGEST

246. Heirs of Tanak Pangaaraan Patiwayon et. al v Hon. Martinez et al.

G.R No. 49027; June 10, 1985
Facts:
Respondent Tagwalan, to fraud, was able to sucure a title on his own name to the exclusion of
his heirs who equally have a right to a share of the land.

Issues: 1.whether or not the action was for reconveyance

2. Whether ornot the action of the co-heirs had already prescribed having been brought
one year from the date of issuance of OCT.

Held:
1. Yes. Petitioners action was one for reconveyance.

Petitioners main purpose was to recover their rightful share of their inheritance as revealed in
their arguments.

2. No. Petitioners actin had not yet prescribed.

Since respondent was able to secure the disputed title thru fraud, an implied trust was created
in favor of his co-heirs. Respondent is deemed to merely hold the property for them and his
benefit.

There being an implied trust, the action to recover prescribes after 10 years. Consequently, the
present action I not yet barred by prescription.

247.Adaza and Marundan v CA

G.R No. L-47354; March 21, 1989

Facts: Victor Adaza executed a deed of donation covering a parcel of land in favor of his
daughter violeta. When, however victor died, violeta signed a deed of Waiver wherein she
recognized the fact that she owned the subject land in common with her brother Horacio
although the propertys title was issued solely on her name.

Issue: whether or not an implied trust was created in favor of Horacio.

Held: Yes. An implied trust was created in favor of Horacio.

The statement in the Deed of Waiver is Admission of Violeta that she held half of the land in
trust for petitioner Horacio. The execution of the Deed of Donation by Violetas father created an
implied trust in favor of Horacio with respect of half of the property donated. This is in
consonance with Article 1449 which provides that, there is also an implied trust when a
donation is made to a person but it appears that although the legal estate is transmitted to the
done, he nevertheless is either to have no beneficial interest or only a part thereof.

248. Gonzales v IAC

GR No. 66479; Nov. 21, 1991

Facts: Private respondents instituted a complaint for partition against Fausto Soy. They claim
that they had a pro-indiviso share in a parcel of land. Their claim was anchored on the fact that
Fausto Soy was the borther of Emelia Soy, the deceased mother of Rosita Lopez; of Cornelia
Soy, deceased mother of Agueda, Amado, and Felipe; and of Anastacia Soy. Fausto contested
the claims of plaintiffs and asserted exclusive title in his name; claiming that the land in question
was never registered in the names of his parents, that he had been the registered owner of the
premises since 1932.

Issue: whether or not the subject land was held in trust by Fausto Soy for his sisters Emilia,
Corelia, and Anastacia.

Held: No. the subject land was no held in trust by Fausto Soy for his sisters.

After Fausto Soy, the predecessors- in interest of petitioners, had appeared to be the registered
owner of the lot for more than 30 years, his title indefeasible and his dominical rights over it
could no longer be challenged. Any insinuation as to existence of an implied constructive trust
should not be allowed. Private respondent is likewise wrong in invoking article 1456 as this is a
constructive trust arising from operation of law which is not a trust in the technical sense.

249. Spouses Horacio and Felisa Benito v Agapita Saguitan-Ruiz

G.R No. 149906, December 26, 2002

Facts:
The allegations in the complaint constituted a suit for reconveyance and not an action to
invalidate certificates of title grounded on fraud.

Issue: whether or not the prescriptive period for the action is 10 years.

Held: yes. The prescriptive period is 10 years, not one year from entry of decree of registration,
otherwise stated. CA is correct in holding that respondents complaint is in reality an action
reconveyance based on implied or constructive trust. This suit prescribes 10 years from the
issuance of title over the property.
250. added case by Judge, please find na lang case digest
Eugenio Feliciano etal vs Pedro Canoza etal